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

Author/Editor:

International Monetary Fund

Publication Date:

September 1, 1997

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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. 97/108

Subject:

English

Publication Date:

September 1, 1997

ISBN/ISSN:

9781451853063/1018-5941

Stock No:

WPIEA1081997

Format:

Paper

Pages:

46

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