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

22 Pages Posted: 15 Feb 2006

See all articles by Kate Phylaktis

Kate Phylaktis

City University London - Sir John Cass Business School

Date Written: May 1991

Abstract

This paper examines the demand for money under conditions of very high inflation in Argentina, Bolivia, Brazil, Chile and Peru during the 1970s and 1980s. We test whether the monetary and inflationary experiences of these countries can be adequately characterized by the Cagan (1956) model, using an econometric procedure which is not reliant on any particular assumption concerning expectations formation except that forecasting errors are stationary. We also examine the importance of foreign asset substitution in domestic portfolios.

JEL Classification: C22, E41

Suggested Citation

Phylaktis, Kate, The Demand for Money During High Inflation Episodes: Some Latin American Evidence on the Cagan Model (May 1991). IMF Working Paper No. 91/48; Cass Business School Research Paper. Available at SSRN: https://ssrn.com/abstract=884808

Kate Phylaktis

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom
+44 20 70408735 (Phone)
+44 20 70408881 (Fax)

HOME PAGE: http://www.cass.city.ac.uk/faculty/k.phylaktis/

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