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Money, inflation and output in Romania, 1992-2000

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  • Budina, Nina
  • Maliszewski, Wojciech
  • de Menil, Georges
  • Turlea, Geomina

Abstract

Money, inflation and output are tested for stationarity, and found to be integrated of order one. We apply the Johansen procedure for cointegration to test for the rank of the matrix of cointegrating relations (one), to test for the weak exogeneity of output (accepted), inflation (rejected) and money (rejected). We interpret the unique cointegrating relationship as an extended Cagan money demand equation, and estimate error correction mechanisms, in which excess supply of real money contributes significantly to the short-run dynamics of inflation and real money. The evidence suggests than in the period considered, including the sub-sample between the liberalisation shocks, inflation was largely a monetary phenomenon.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 25 (2006)
Issue (Month): 2 (March)
Pages: 330-347

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Handle: RePEc:eee:jimfin:v:25:y:2006:i:2:p:330-347

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Web page: http://www.elsevier.com/locate/inca/30443

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References

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Cited by:
  1. Mester Ioana Teodora & Simut Ramona, 2010. "Granger Causality And Cointegration In Romania’S Inflationary Dynamics €“ An Empirical Study," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 272-278, July.
  2. Capraru Bogdan & Ihnatov Iulian, 2011. "External Factors Influence On Inflation: The Case Of Romania," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 469-475, July.
  3. Gherman Liliana, 2010. "Business Planning In The Context Of The Economic Crisis," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 279-285, July.

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