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Money Demand, the Cagan Model and the Inflation Tax: Some Latin American Evidence

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Author Info
Phylaktis, Kate
Taylor, Mark P

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Abstract

This paper examines the demand for money under conditions of very high inflation in Argentina, Bolivia, Brazil, Chi le, and Peru during the 1970s and 1980s. The authors test whether the monetary and inflationary experiences of these countries can be adequately characterized by the Cagan (1956) model, using an econometric procedure that is not reliant on any particular assumpti on concerning expectations formation except that forecasting errors are stationary. The authors also examine the importance of foreign asset substitution in domestic portfolios and the hypothesis that monetary policy was tantamount to maximization of the inflation tax revenue before testing the rational expectations hypothesis. Copyright 1993 by MIT Press.

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Publisher Info
Article provided by MIT Press in its journal Review of Economics & Statistics.

Volume (Year): 75 (1993)
Issue (Month): 1 (February)
Pages: 32-37
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Handle: RePEc:tpr:restat:v:75:y:1993:i:1:p:32-37

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  1. Atanas Christev, 2005. "The Hyperinflation Model of Money Demand (or Cagan Revisited): Some New Empirical Evidence from the 1990s," CERT Discussion Papers 0507, Centre for Economic Reform and Transformation, Heriot Watt University. [Downloadable!]
  2. Almeida Neto, Heitor Vieira de & Bonomo, Marco Antônio Cesar, 1999. "Optimal State-Dependent Rules, Credibility, and Inflation Inertia," Economics Working Papers (Ensaios Economicos da EPGE) 349, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
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  3. Hakan Berument & Onur Ince, 2005. "Effect of S&P500’s Return on Emerging Markets : Turkish Experience," Departmental Working Papers 0508, Bilkent University, Department of Economics. [Downloadable!]
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  4. Dimitris Georgoutsos & George Kouretas, 2000. "A Multivariate I(2) Cointegration Analysis Of German Hyperinflation," Working Papers 0001, University of Crete, Department of Economics, revised 00 Jul 2001. [Downloadable!]
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  5. Wilson Luiz Rotatori, 2006. "Dynamic Structural Models And The High Inflation Period In Brazil: Modelling The Monetary System," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 44, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  6. Mª Jose Gutierrez & Jesús Vazquez, 2003. "Explosive Hyperinflation, Inflation Tax Laffer Curve and Modelling the use of Money," DFAEII Working Papers 200227, University of the Basque Country - Department of Foundations of Economic Analysis II. [Downloadable!]
  7. Steven B. Kamin & Neil R. Ericsson, 1993. "Dollarization in Argentina," International Finance Discussion Papers 460, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  8. Stefka Slavova, 2003. "Money demand during hyperinflation and stabilization: Bulgaria, 1991-2000," Applied Economics, Taylor and Francis Journals, vol. 35(11), pages 1303-1316, July. [Downloadable!] (restricted)
  9. Yu Hsing, 2006. "Tests Of Functional Forms, Currency Substitution, And Capital Mobility Of Czech Money Demand Function," Prague Economic Papers, University of Economics, Prague, vol. 2006(4), pages 291-299. [Downloadable!] (restricted)
  10. Han, Bing & Hirshleifer, David & Wang, Tracy Yue, 2005. "Investor Overconfidence and the Forward Discount Puzzle," Working Paper Series 2005-21, Ohio State University, Charles A. Dice Center for Research in Financial Economics. [Downloadable!]
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  11. HSING, Yu, 2007. "Tests of the functional form, the substitution effect, and the wealth effect of Mexico’s money demand function," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO - FACULTAD DE ECONOMÍA. [Downloadable!]
  12. Jovis Wolfe Bellot, 2001. "The Stability of the Demand for Broad Money in Argentina in the Post-Financial Liberalization Period," Fordham Economics Dissertations 2002.2, Fordham University, Department of Economics. [Downloadable!]
  13. Tatsuyoshi Miyakoshi, 2008. "Seigniorage Revenue or Consumer Revenue? Theoretical and Empirical Evidences," Discussion Papers in Economics and Business 08-11, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP). [Downloadable!]
  14. Mark A. Hooker, 1997. "Misspecification versus bubbles in hyperinflation data: Monte Carlo and interwar European evidence," Finance and Economics Discussion Series 1997-49, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
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