Yugoslav Inflation and Money

Ashok Lahiri

No 1991/050, IMF Working Papers from International Monetary Fund

Abstract: Yugoslav inflation unfolded as a classic wage-price-exchange rate spiral through the 1970s and 1980s and exploded into hyperinflation in the last quarter of 1989. This paper examines the process of monetary accommodation of inflation, the behavior of demand for money, and the interaction between the two in Yugoslavia. The asset-liability structure of the Central Bank, together with the policy stance on exchange and interest rates, led to a significant feedback from inflation to money supply. Real money balances are found to have been cointegrated with other economic variables despite their explosive and seasonal nature, and hence in long-run equilibrium relationship as economic theory would suggest.

Keywords: WP; foreign currency; money stock; exchange rate; monetary policy; real rate of interest; currency depreciation; money demand; deposit scheme; NBY credit; inflation objective; policy shift; base money in Yugoslavia; money growth; NBY assets; base money expansion; dinar money; Monetary base; Inflation; Bank deposits; Demand for money; Credit (search for similar items in EconPapers)
Pages: 46
Date: 1991-05-01
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