La demanda de dinero en Uruguay: 1980.1-2002.4
The new monetary policy implemented in Uruguay in July 2002, rests on the existence of a stable relationship between the intermediate monetary aggregate and the price level, particularly during rough times, such as financial crises (1982-83; 2001-02). This paper analyzes the stability of transactional money demand and the power of a monetary-aggregates policy. First, the estimation of an error-correction model for real money balances points out a basic long-run relationship and a reasonable dynamic specification that passes standard stability tests. Then, after its evaluation, it seems as if the monetary channel is not the only one in the explanation of the price formation in Uruguay and that, as a result, the monetary-aggregates policy alone cannot guarantee to reach a predetermined price path.
|Date of creation:||11 Aug 2004|
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