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The volatile relationship between deficits and inflation in Ukraine, 1992‐1996

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  • Georges de Ménil

Abstract

This paper compares the annual average of inflation in Ukraine, from 1992 to 1996, with its steady‐state tendency each year. The steady‐state tendency is, in turn, computed from data on monetary velocity and on the proportion of the total public deficit financed by domestic monetary emissions. Velocity is that of the base of the inflation tax in the steady‐state, namely household M2 plus a fraction of enterprise M2. The use of this concept rather than high‐powered money corresponds to the public and quasi‐public nature of most commercial banks and many large and medium‐sized enterprises until 1996. The demonstrated rough correspondence between actual inflation and calculated, steady‐state inflation confirms the validity of the underlying monetary model.

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  • Georges de Ménil, 1997. "The volatile relationship between deficits and inflation in Ukraine, 1992‐1996," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 5(2), pages 485-497, November.
    • Handle: RePEc:bla:etrans:v:5:y:1997:i:2:p:485-497
    DOI: 10.1111/j.1468-0351.1997.tb00026.x
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    1. Bruno, Michael & Easterly, William, 1998. "Inflation crises and long-run growth," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 3-26, February.
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    1. Budina, Nina & Maliszewski, Wojciech & de Menil, Georges & Turlea, Geomina, 2006. "Money, inflation and output in Romania, 1992-2000," Journal of International Money and Finance, Elsevier, vol. 25(2), pages 330-347, March.

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