The Welfare Cost of Inflation and the Regulations of Money Substitutes (original) (raw)

Policy Research Working Papers

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Inflation and the demand for money in developing countries

World Development, 1994

The World Bank Summary.-The sensitivity of money holdings to yield is an important issue for financial sector reform. For low-income developing countries, this sensitivity has been judged mainly on the basis of demand studies which use inflation as the opportunity cost of holding money. But researchers have generally neglected the fact that, because changes in prices may appear in dynamic demand for money equations even if the demand for money is not yield sensitive, it is not normally possible to make valid inferences about the inflation sensitivity of equilibrium demand for money. The severity of the problem is illustrated by reference to Ghana and China.

The Scope for Inflation Targeting in Developing Countries1

International Monetary Fund eBooks, 1997

This is a Working Paper and the author(s) would welcome any comments on the present text. Citations should refer to a Working Paper o/the International Monetary Fund. The views expressed are those of the author(s) and do not necessarily represent those of the Fund.

Dynamics of Inflation in developing economies: A quest for conceptual-framework

2017

The paper is aimed at making conceptual analysis of the dynamics of inflation, for the purpose of providing vital information on contemporary knowledge and understanding of the patterns and nature of effects of some variables on inflation in developing economies and countries of Commonwealth West Africa. Existing literatures on inflation and its dynamics were used as source of data for this study. Methodology used in this research was relied heavily on existing literatures (previous studies) on the subject. The paper indicated that various previous studies used a number of (but limited) econometrics models which limits the scope of the analysis of the various write ups.A number of studies reported positive significant relationships or influences by money supply, exchange rate, GDP (as a measure of economic growth), interest rate and fiscal deficit on inflation rate. The paper concluded that not all variables are in the same manner of significance and essential in explaining the dyna...

Inflation Everywhere is a Monetary Phenomenon: An Introductory Note

The Pakistan Development Review, 2006

Ever since the 1970s, when inflation became a virtually global phenomenon, controlling inflation has become a high priority for policy-makers. Given the well-known costs of inflation, policy now in all countries is inflation-averse. Perhaps one of the more important adverse consequences of inflation may be that high and persistent inflation is a regressive tax1 which adversely impacts the poor.2 The poor are extremely limited in their options to protect themselves against inflation; they are normally asset-poor, while most of their saving is in the form of cash. Inflation erodes cash savings and protects the rich who hold real assets.3 It is not surprising that inflation may be politically costly for the government. Studies have also found that high and volatile inflation has been detrimental to growth and financial sector development. Resource allocation is inhibited as inflation obscures relative price changes and thus inhibits optimal resource allocation. For policy to control in...

Inflation targeting in Zambia: panacea or a. case of misplaced expectations

2006

This Research Paper has benefited from the wisdom of many colleagues and staff without whose support it would have been difficult to complete. Special thanks are due to Dr Howard Nicholas who gave me not only invaluable guidance but also hope when I was low and down. I am also greatly indebted to Dr Jan Van Heemst, Dr Karel Jansen and Veronica Bayangos for their kind and insightful suggestions. They were always willing and ready to listen to me even when I made little sense. I also extend a note of thanks to Dr Peter de Valk and my fellow students who shared their ideas in shaping and formulating the.Research Paper during the design stages. This research would not have been possible without funding from the African Development BanldJapan Fellowship. I remain grateful for their financial support. On a lighter note, I would like to thanlc my colleagues for reminding me that there is a social life beyond academics. The sports centre provided the much needed relief. Despite the support and input rendered, I remain entirely responsible for the content, and mistakes in this paper. Like all other achievements in my life, should this be one, let God's providence be acknowledged.

The Scope for Inflation Targeting in Developing Countries

IMF working paper, 1997

Africa's rising inflation : causes, consequences, and cures

1991

This paper provides an analytical and selective empirical survey of inflation in sub-Saharan Africa. It begins with an empirical assessment of inflation in Africa using various price indicators, and then looks at the major instruments of anti-inflationary policy. Instead of listing each instrument, the paper attempts to distinguish countries by broad policy regimes into four categories. A common generalized model of inflation is set-up, and each policy regime is shown to be a special case of that general model. The four prototypes classified are: (a) the CFA franc zone model of pegged exchange rates, open capital account and no price controls; (b) fixed-but-adjusting exchange rates, with closed capital account and some selective price controls; (c) fixed-but-adjusting exchange rates with widespread parallel markets, closed capital account and selective price controls; and (d) dual exchange rates, closed capital account but with extensive and effective pricecontrols. It uses the resu...

Topics in the economics of money substitutes in developing and transition countries

2006

Recent research has shown that money substitutes - whether in the form of foreign currency or of more exotic instruments such as privately-issued moneys - are common in developing and transition countries, and have important consequences for macroeconomic and financial sector policy. The aim of this thesis is to advance our theoretical and empirical understanding of the determinants of money substitution in developing and transition economies. We begin in Chapter 1 by addressing the need for a general theoretical framework for the analysis of money substitutes. Reviewing both the classical and the modern theoretical literature on money, we conclude that the Credit theory of money - an ancient but until recently neglected theory which conceives of money as a unilateral financial contract between its issuer and its bearer - is a useful framework for such analysis. In Chapter 2, we undertake an empirical analysis of non-cash settlements (NCS) in Croatia. Using time series econometric...

The Welfare Cost of Inflation and the Regulations of Money Substitutes (original) (raw)

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