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

IMF Working Papers, September 1, 1997

Source details

Canonical URL

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

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Published: September 1, 1997
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451853063.001

Overview

• Publication date: September 1, 1997
• Type: IMF Working Paper (Working Paper No. 1997/108)
• Core aim: Identify stylized facts on the behavior of key macroeconomic variables during high inflation and stabilization in countries in transition; assess conformity with standard open economy monetary theory; develop a simple monetary model of the exchange rate with price stickiness and inflation inertia; carry out an econometric analysis of real money balances during inflation stabilization; assess prospects for velocity developments and likely pace of remonetization.

Stylized facts and theoretical framework

• Identified stylized facts on behavior of key macroeconomic variables during:
  • High inflation
  • Stabilization episodes in transition economies
• Theoretical approach:
  • Development of a simple open economy monetary model of the exchange rate
  • Model incorporates:
  • Price stickiness
  • Inflation inertia
  • Purpose: Examine extent to which stylized facts conform to predictions of standard open economy monetary theory

Econometric analysis and empirical findings

• Empirical focus:
  • Behavior of real money balances during inflation stabilization
• Methods:
  • Econometric analysis applied to transition economies (with special reference to the Baltics, Russia, and other countries of the former Soviet Union)
• Conclusions drawn from analysis:
  • Assessment of prospects for velocity developments in countries in transition
  • Assessment includes likely pace of remonetization

Policy implications and projections

• The paper concludes by:
  • Assessing prospects for velocity developments in transition economies
  • Discussing the likely pace of remonetization during and after stabilization

Subjects and keywords

• Subject: Demand for money, Exchange rates, Foreign exchange, Inflation, Monetary base, Money, Prices, Spot exchange rates
• Keywords: Baltics, Central and Eastern Europe, dd log exchange rate, Demand for money, Eastern Europe, Exchange rates, Income velocity of money, Inflation, Monetary base, money balance, money stock, open economy, price level, rate of depreciation, rate of exchange rate depreciation, rate of inflation, Spot exchange rates, spot market, Stabilization, stabilization program, Transition economies, WP

Content in this bundle

• _wp97108
  • _wp97108 (Markdown version)
  • _wp97108 (PDF)