Template-type: ReDIF-Paper 1.0
Author-Name: Zorica Mladenovic
Author-Email: zorima@eunet.rs.
Author-Workplace-Name: Faculty of Economics, University of Belgrade
Author-Name:  Bent Nielsen
Author-Email: bent.nielsen@nuffield.ox.ac.uk
Author-Workplace-Name: Department of Economics, University of Oxford
Title: The role of income in money demand during hyper-inflation: the case of Yugoslavia
Abstract:  During extreme hyper-inflations productivity tends to fall dramatically. Yet, in models of money demand 
in hyper-inflation variables such as real income has been given a somewhat passive role, either assuming 
it exogenous or to have a negligible role. In this paper we use an empirical methodology based on 
cointegrated vector autoregressions to analyse data from the extreme Yugoslavian episode to investigate 
the role of income. The analysis suggests that even in extreme hyper-inflation the monetary variables and real
income are simultaneously determined. The methodology enables a description of the short term 
adjustment of the variables considered.
Keywords: Cointegration, hyper-inflation, income, money-demand
Length: 23 pages
Creation-Date: 2009-03-27
Number: 2009-W02
File-URL: http://www.nuffield.ox.ac.uk/economics/papers/2009/w2/MladenovicNielsen.pdf
File-Format: application/pdf
Handle: RePEc:nuf:econwp:0902