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Demand for Money During Transition: The Case of Russia

Author

Listed:
  • Barry Harrison

    (Department of Economics and Politics, Nottingham Trent University)

  • Yulia Vymyatnina

Abstract

During the transition to a market economy in Russia, the Bank of Russia assumed responsibility for setting and implementing monetary policy. As transition progressed, this involved establishing annual declining target rates for inflation and intermediate targets for the growth rate of M2 money aggregate. This paper tests the stability of long run and short run demand for money in Russia using M1 and M2 money aggregates. We find some evidence of stability, but the adjustment lag is relatively long and money demand functions demonstrate signs of instability over the period. We conclude that targeting interest rates could be a better policy option for the Bank of Russia.

Suggested Citation

  • Barry Harrison & Yulia Vymyatnina, 2005. "Demand for Money During Transition: The Case of Russia," EUSP Department of Economics Working Paper Series 2005/01, European University at St. Petersburg, Department of Economics, revised 22 Nov 2005.
    • Handle: RePEc:eus:wpaper:ec2005_01
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    transition; demand for money;

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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