Money and Productive Efficiency: Evidence from a High-Inflation Country

Erdem BaÅçi, Syed Mahmud and Mustafa Yücel
Authors registered in the RePEc Author Service: Erdem Basci

Emerging Markets Finance and Trade, 2007, vol. 43, issue 1, 64-73

Abstract: This paper examines how money balances held by manufacturing firms affect their efficiency in generating sales revenue in a high-inflation economy. The analysis employs data from Turkish firms to estimate a stochastic frontier model, finding a strong positive association between the firms' money holdings and their efficiency. However, the role of money balances seems to diminish as firms hold higher raw material inventories.

Keywords: high inflation; inventories; manufacturing; money demand by firms; stochastic frontier estimation; Turkey (search for similar items in EconPapers)
Date: 2007
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