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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 cointegration 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 function. We then estimate error correction mechanisms, which explain the short-run movements of real money and inflation. The evidence suggests that in the period considered, including the sub-sample between the liberalization shocks, inflation was largely a monetary phenomenon.
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  • Budina, Nina & Maliszewski, Wojciech & de Menil, Georges & Turlea, Geomina, 2006. "Money, inflation and output in Romania, 1992-2000," Journal of International Money and Finance, Elsevier, vol. 25(2), pages 330-347, March.
  • Handle: RePEc:eee:jimfin:v:25:y:2006:i:2:p:330-347
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    Cited by:

    1. Claudiu Tiberiu Albulescu & Daniel Goyeau & Cornel Oros, 2015. "On the Long Run Money-Prices Relationship in CEE Countries," Economic Research Guardian, Weissberg Publishing, vol. 5(1), pages 73-96, June.
    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. Paresh Kumar Narayan, 2010. "Modelling money demand for a panel of eight transitional economies," Applied Economics, Taylor & Francis Journals, vol. 42(25), pages 3293-3305.
    4. Ionuţ Cristian BACIU, 2014. "The Relationship Between Inflation And The Main Macroeconomic Variables In Romania," Network Intelligence Studies, Fundația Română pentru Inteligența Afacerii, Editorial Department, issue 4, pages 161-172, November.
    5. 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.
    6. Olaolu Richard Olayeni & Aviral Kumar Tiwari & Reza Sherafatian-Jahromi & Olagbaju Ifeolu Oladiran, 2014. "Inflation, output gap, and money in Malaysia: evidence from wavelet coherence," International Journal of Computational Economics and Econometrics, Inderscience Enterprises Ltd, vol. 4(3/4), pages 320-338.
    7. Zahra Rouhani & Mehdi Behname & Sayed Mahdi Mostafavi, 2013. "A Comparative Study For Opportunity Cost Of Holding Money Between Selected Developing And Developed Countries," Romanian Economic Business Review, Romanian-American University, vol. 8(4), pages 7-17, december.
    8. Sovannroeun Samreth, 2015. "An Estimation of the Money Demand Function in Cambodia," Economics Bulletin, AccessEcon, vol. 35(4), pages 2625-2636.
    9. 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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