Household Demand for Money in Poland: Theory and Evidence

January 1, 1992

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Timothy D. Lane Household Demand for Money in Poland: Theory and Evidence, (USA: International Monetary Fund, 1992) accessed November 24, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the household demand for narrow money in Poland during the 1980s. At that time, there were shortages, but informal trade in both goods and foreign exchange was common, and holdings of foreign currency were substantial. Household money demand in this environment is first examined at the theoretical level: a representative household’s holding of domestic and foreign money is analyzed in a cash-in-advance model in which domestic currency is needed to purchase goods in the official shops while either domestic or foreign currency can be used in the black market. This model gives rise to a formulation of money demand which is then estimated using household-level data from 1979 to 1988.

Subject: Consumption, Demand for money, Economic sectors, Foreign exchange, Inflation, Informal economy, Market exchange rates, Money, National accounts, Prices

Keywords: Consumption, Demand for money, Expected return, Foreign currency, Inflation, Informal economy, Market exchange rates, Mattress money, Money balance, Money demand, Money holding, Money market, Narrow money, Retail price index, Sight deposit, Socialist economy, Store of value, WP, Zloty money

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1992/006
Stock No:

WPIEA0061992
ISBN:

9781451842234
ISSN:

1018-5941

Notes

Also published in Staff Papers, Vol. 39, No. 4, December 1992.

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