Explaining and Forecasting the Velocity of Money in Transition Economies, with Special Reference to the Baltics, Russia and other Countries of the Former Soviet Union

Publication Date:

September 1, 1997

Electronic Access:

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Summary:

The paper identifies a number of stylized facts on the behavior of key macroeconomic variables during high inflation and stabilization in countries in transition. To examine the extent to which these stylized facts conform to the predictions of standard open economy monetary theory, the paper develops a simple monetary model of the exchange rate incorporating price stickiness and inflation inertia, and carries out an econometric analysis of the behavior of real money balances during inflation stabilization. The paper concludes by assessing the prospects for velocity developments in countries in transition, including the likely pace of remonetization.

Series:

Working Paper No. 1997/108

Subject:

Demand for money Exchange rates Foreign exchange Inflation Monetary base Money Prices Spot exchange rates

English

Publication Date:

September 1, 1997

ISBN/ISSN:

9781451853063/1018-5941

Stock No:

WPIEA1081997

Pages:

46

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