Money Demand in a High Inflation Economy: The Case of Israel
Money demand plays a central role in recent models of rapid inflation and stabilization which are highly relevant to the Israeli economy. This paper uses co-integration analysis to estimate money demand in Israel. We find that money demand shifted at the beginning of the 1980s, probably as a result of increased use of liquid indexed assets which provide protection against high inflation. In the previous two decades the equation was a fairly conventional 'U.S.-type' logarithmic function. In the last decade the equation has had a lower constant and has exhibited less sensitivity to interest rate changes. In both periods the nominal rate of interest and real private consumption have been co-integrated with real M1 balances, and interest elasticity has been less than unity. Copyright 1994 by MIT Press.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 76 (1994)
Issue (Month): 1 (February)
|Contact details of provider:|| Web page: http://mitpress.mit.edu/journals/|
|Order Information:||Web: http://mitpress.mit.edu/journal-home.tcl?issn=00346535|
When requesting a correction, please mention this item's handle: RePEc:tpr:restat:v:76:y:1994:i:1:p:186-91. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kristin Waites)
If references are entirely missing, you can add them using this form.