Household Demand for Money in Poland: Theory and Evidence

Timothy Lane

No 1992/006, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; money demand; foreign currency; expected return; money market; narrow money; retail price index; socialist economy; store of value; zloty money; money holding; sight deposit; money balance; mattress money; Demand for money; Market exchange rates; Inflation; Informal economy; Consumption (search for similar items in EconPapers)
Pages: 44
Date: 1992-01-01
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Citations: View citations in EconPapers (8)

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