Abstract
This paper investigates empirically the Cagan style money demand function for Russia during the recent hyperinflation era, 1992–1994. Using the Johansen multivariate cointegration test, results indicate that rate of change of exchange rate (currency depreciation) is required in the demand function for real M2 and real currency in order to obtain a stationary long-run relationship. Error correction model results show that there exists a bidirectional causality between real money balances and determinants of real money demand, including currency depreciation. Exchange rate sensitivity of the demand for money indicates currency substitution.
Full Text 
Sign-in/Register to access full text options
Sign-in/Register to access full text options 
Published version (
Free)
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
