This study shows that the aggregate demand for M1 in the group of countries participating in the Exchange Rate Mechanism (ERM) of the European Monetary System can be expressed as a stable function of ERM-wide income, inflation, interest rates, and the exchange rate of the European Currency Unit...

An unexpected shortage of banknotes emerged during 1992 in the former Soviet Union. The cash shortage is explained by the asymmetry in the monetary union that prevailed, under which one member (the Russian Federation) controlled banknote production while every member could create deposit money....

The paper evaluates whether a monetary aggregate can serve as a useful predictor of inflation, using recent developments in the principle of cointegrated variables. M2 but not M1 is cointegrated with relevant price, transactions, and rate of return variables. However, deviations of M2 from its...

This paper presents estimates of a demand function for broad money in Japan. The function explains both secular trends in broad money during the 1970s and 1980s and the sharp decline in the income velocity of broad money during 1986-88. The inclusion of wealth and a measure of the return on...

This paper examines monetary concepts and definitions. It notes that approaches to monetary analysis, and the concept of money itself, have been undergoing substantial change in many countries due in large part to recent innovation, which has affected financial markets, financial instruments,...

This paper discusses the effects of monetary indexation on the revenues from monetization in Iceland. The paper starts by showing that monetization revenues fell sharply after indexation was introduced in 1979 and evaluates the different and partly ambiguous factors behind this development. The...

The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and...

The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and...

Commodity prices may be a leading indicator of inflation, because of the relative importance of flexible auction markets for the determination of these prices. Empirical tests using data for the large industrial countries as a group suggest that changes in commodity prices tend to lead those in...

The search for ways to ensure growth while accommodating necessary expenditure cuts to correct fiscal imbalances, has often led to the advocacy of the government own savings (GOS) measure as an indicator of growth potential in fiscal adjustment. This paper critically examines the rationale of...