Household Demand for Money in Poland: Theory and Evidence

44 Pages Posted: 15 Feb 2006

See all articles by Timothy Lane

Timothy Lane

International Monetary Fund (IMF) - Policy Development and Review Department

Date Written: January 1992

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.

JEL Classification: E41, P34

Suggested Citation

Lane, Timothy, Household Demand for Money in Poland: Theory and Evidence (January 1992). IMF Working Paper No. 92/6, Available at SSRN: https://ssrn.com/abstract=884544

Timothy Lane (Contact Author)

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

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