Money Supply and Soviet Foreign Trade

Abstract

The balance of net foreign assets remained small in Gosbank’s balance sheets and thus had little influence on domestic money supply, while differences between domestic and world prices, which can be understood as foreign trade taxes, caused large redistribution of domestic funds. The international comparisons of foreign trade taxation confirmed that the Soviet experience was unique. The economic meaning of the redistribution in the Soviet economy was unclear because it occurred within the state sector; it, however, seems appropriate to understand that it was a mere by-product of the comprehensive price regulation and had no positive economic function. More data on hard currency flows are needed to investigate the influences of foreign funds flows on the Soviet real economy.