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The role of income in money demand during hyper-inflation: the case of Yugoslavia

Author

Listed:
  • Zorica Mladenovic

    (Faculty of Economics, University of Belgrade)

  • Bent Nielsen

    (Department of Economics, University of Oxford)

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.

Suggested Citation

  • Zorica Mladenovic & Bent Nielsen, 2009. "The role of income in money demand during hyper-inflation: the case of Yugoslavia," Economics Papers 2009-W02, Economics Group, Nuffield College, University of Oxford.
    • Handle: RePEc:nuf:econwp:0902
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Cointegration; hyper-inflation; income; money-demand;
    All these keywords.

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