The Demand for Money During High Inflation Episodes: Some Latin American Evidenceon the Cagan Model

IMF Working Papers, May 1, 1991

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The Demand for Money During High Inflation Episodes: Some Latin American Evidenceon the Cagan Model

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Bibliographic details

• Authors: Mark P. Taylor, Kate Phylaktis
• Published: May 1, 1991
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451846683.001

Overview

• Authors: Mark P. Taylor, Kate Phylaktis
• Date: May 1, 1991
• Geographic focus: Argentina, Bolivia, Brazil, Chile, Peru
• Time period studied: 1970s and 1980s
• Pages: 22

Research objective and scope

• Examine the demand for money under conditions of very high inflation in Argentina, Bolivia, Brazil, Chile and Peru during the 1970s and 1980s.
• Test whether the monetary and inflationary experiences of these countries can be adequately characterized by the Cagan (1956) model.
• Examine the importance of foreign asset substitution in domestic portfolios.

Methodology

• Employ an econometric procedure which is not reliant on any particular assumption concerning expectations formation except that forecasting errors are stationary.
• Assess the role of foreign asset substitution alongside domestic money-holding behavior.

Key themes and subjects

• Demand for money
• External position
• Foreign assets
• Government debt management
• Inflation
• Money
• Price controls
• Prices
• Public financial management (PFM)

Keywords (as listed)

• Bolivia program
• Demand for money
• exchange premium
• expected return
• forecasting inflation
• Foreign assets
• Government debt management
• Inflation
• inflation rate series
• money balance
• money holding
• money series
• Price controls
• rate depreciation
• rate of inflation
• WP