IMF Staff Papers

IMF Staff Papers, Volume 49, No. 3

Publication Date:

September 23, 2002

Electronic Access:

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Summary:

This paper empirically investigates the monetary impact of banking crises in Chile, Colombia, Denmark, Japan, Kenya, Malaysia, and Uruguay during 1975–98. Cointegration analysis and error correction modeling are used to research two issues: (i) whether money demand stability is threatened by banking crises; and (ii) whether crises lead to structural breaks in the relation between monetary indicators and prices. Overall, no systematic evidence that banking crises cause money demand instability is found. The paper also analyzes inflation targeting in the context of the IMF-supported adjustment programs.

Series:

IMF Staff Papers No. 2002/004

Subject:

Demand for money Foreign exchange Income inequality Inflation Inflation targeting Monetary policy Money National accounts Prices Real exchange rates