- •1. Introduction 4
- •2. Theoretical Links 5
- •Introduction
- •Theoretical Links
- •Aggregate Supply and Aggregate Demand Analysis
- •Sources of Financing and Money Decomposition
- •Accumulation of arrears.
- •Borrowing From the Central Bank
- •Borrowing From the Public
- •Running Down Foreign Exchange Reserves
- •Accumulation of Arrears
- •Specific Theoretical Hypotheses
- •Olivera-Tanzi Effect
- •Deferred Inflation Effect
- •New Fiscal Theory of Price Level
- •Closing Remarks
- •Developments
- •Definitions
- •Dynamics
- •Financing
- •Direct nbu financing
- •External Financing
- •Inflation Performance
- •Empirical Analysis
- •Methodology
- •Regression Results
- •Policy Implications
- •Conclusions
- •References
- •Appendix 2. Augmented Dickey-Fuller Unit Root Tests Results
- •Appendix 3. Granger Causality Tests
- •Appendix 4. Var Results
- •Appendix 5. Stability of var scheme
- •Appendix 6 Cross Correlations Cross Correlation of Inflation and Government Balance
- •Correlations for Contemporaneous Values of Variables Examined
Appendix 2. Augmented Dickey-Fuller Unit Root Tests Results
*,**,*** denotes rejection of Unit Root Hypothesis at 1%,5% 10% significance level respectively
Variable ADF Test Statistic
LOG(CPI) -2.419940 10% Critical Value -3.2712
GBAL -6.046655*** 1% Critical Value -3.2778
LOG(EXRATE) -2.159280 10% Critical Value -3.1689
LOG(MBASE) -1.181760 10% Critical Value -3.1902
LOG(MA_CLG) -2.784070 10% Critical Value -2.9804
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DLOG(CPI) -4.601403 *** 1% Critical Value -4.1162
D(LOG(EXRATE)) -4.278143*** 1% Critical Value -3.5417
D(LOG(MA_CLG)) -5.590083** 5% Critical Value -3.5417
D(LOG(MBASE)) -3.149715** 5% Critical Value -2.91
Appendix 3. Granger Causality Tests
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Dependent variable: DLOG(CPI) |
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Exclude |
Prob. |
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DLOG(EXRATE) |
0.1400 |
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GBAL |
0.4402 |
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DLOG(MA_CLG) |
0.0249 |
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DLOG(MBASE) |
0.8719 |
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All |
0.0072 |
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Dependent variable: DLOG(EXRATE) |
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Exclude |
Prob. |
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DLOG(CPI) |
0.0708 |
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GBAL |
0.7822 |
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DLOG(MA_CLG) |
0.0013 |
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DLOG(MBASE) |
0.4049 |
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All |
0.0125 |
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Dependent variable: GBAL |
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Exclude |
Prob. |
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DLOG(CPI) |
0.5381 |
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DLOG(EXRATE) |
0.2072 |
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DLOG(MA_CLG) |
0.8708 |
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DLOG(MBASE) |
0.5321 |
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All |
0.7260 |
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Dependent variable: DLOG(MA_CLG) |
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Exclude |
Prob. |
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|
DLOG(CPI) |
0.0114 |
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DLOG(EXRATE) |
0.0201 |
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GBAL |
0.0759 |
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DLOG(MBASE) |
0.7754 |
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All |
0.0436 |
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Dependent variable: DLOG(MBASE) |
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Exclude |
Prob. |
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|
DLOG(CPI) |
0.1549 |
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DLOG(EXRATE) |
0.2431 |
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GBAL |
0.0076 |
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DLOG(MA_CLG) |
0.7187 |
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All |
0.0115 |
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