Money demand during hyperinflation and stabilization: Bulgaria, 1991-2000
Abstract:The demand for money in Bulgaria is estimated over a ten-year period (1991-2000) of high inflation and inflation uncertainty. The paper distinguishes between three well-defined sub-periods: high, variable, but not systematically accelerating inflation from 1991 until April 1996; the near-hyperinflation period from May 1996 to February 1997; and the subsequent stabilization after the adoption of a currency board. The empirical analysis utilizes a standard methodology of cointegration and error correction. The functional determinants of the demand for money change during the different sub-periods. During the hyperinflation episode, Cagan's model is employed.
Document Type: Research Article
Affiliations: The World Bank and London School of Economics. The World Bank, 1818 H Street, NW, Washington DC, 20433, USA, Email: firstname.lastname@example.org
Publication date: July 20, 2003