Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/212605
Authors: 
Korhonen, Iikka
Mehrotra, Aaron
Year of Publication: 
2007
Series/Report no.: 
BOFIT Discussion Papers 14/2007
Abstract: 
Estimating money demand functions for Russia following the 1998 crisis, we find a stable money demand relationship when augmented by a deterministic trend signifying falling velocity. As predicted by theory, higher income boosts demand for real rouble balances and the income elasticity of money is close to unity. Inflation affects the adjustment towards equilibrium, while broad money shocks lead to higher inflation. We also show that exchange rate fluctuations have a considerable influence on Russian money demand. The results indicate that Russian monetary authorities have been correct in using the money stock as an information variable and that the strong influence of exchange rate on money demand is likely to continue despite de-dollarisation of the Russian economy.
JEL: 
E31
E41
E51
P22
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-875-0
Document Type: 
Working Paper

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