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Inflation and Money in Ukraine

Author

Listed:
  • Banaian, K.
  • Bolgarin, I.V.
  • de Menil, G.

Abstract

This paper treats inflation in Ukraine between 1993 and 1996 as an essentially monetary phenomenon : price increases are determined in such a way as to bring the real value of the supply of money into balance with real money demand. Cointegration techniques are used to estimate long-run money demand. A vector error correction model explains the month-to-month dynamics of inflation, real money are interest rates. The policy variable which determines the medium term value of inflation is the monetary base. If money supply is not accomodating, the effect on inflation of administered price shocks is transitory. These conclusions are illustrated by simulating the effects of a hypothetical increase of 10% in the monetary base of April, 1996, and comparing them with the inflationary effects of a hypothetical administered price shock of 10% in the same month. The money supply raises prices slowly and durably. The administered price shock causes a transient jump in inflation which begins to be reserved after one month.

Suggested Citation

  • Banaian, K. & Bolgarin, I.V. & de Menil, G., 1998. "Inflation and Money in Ukraine," DELTA Working Papers 98-06, DELTA (Ecole normale supérieure).
    • Handle: RePEc:del:abcdef:98-06
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    Citations

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    Cited by:

    1. Mr. Bogdan Lissovolik, 2003. "Determinants of Inflation in a Transition Economy: The Case of Ukraine," IMF Working Papers 2003/126, International Monetary Fund.

    More about this item

    Keywords

    INFLATION ; MONEY ; COINTEGRATION;
    All these keywords.

    JEL classification:

    • P22 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Prices
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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