Keith Sommers

Date of Award

2013

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Van Horn, Patrick

Keywords

Disequilibrium, Economics, Cuba, Discrete Switching Model

Area of Concentration

Economics

Abstract

The Soviet-type centrally planned economy relies heavily on price controls and subsidies. The difficulty of coordinating the price level with the money supply can lead to disequilibrium in the goods market. This can be classified as either excess demand, where consumers demand more goods than are supplied, or excess supply, where producers supply more goods than are demanded. This thesis uses a discrete switching model specific to the economy of Cuba to measure the level of disequilibrium. I find that Cuba's economy fluctuated between periods of excess supply and excess demand. These fluctuations were explained using imports and exports, macroeconomic shocks, and foreign aid. My results suggest that the central planners may prefer mild levels of excess supply in order to avoid the detrimental effect excess demand has on the supply of goods. Future research should focus on the effect of the Cuban reforms of 2010, and also examine specific markets which might be in varying states of disequilibrium.

Rights

The author has granted New College of Florida the nonexclusive right to archive, make accessible, and distribute for educational purposes this work in whole or in part in all forms of media, now or hereafter known. The copyright of this work remains with the author.

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