Inflation and available money in the Venezuelan economy
DOI:
https://doi.org/10.29076/issn.2528-7737vol13iss32.2020pp51-62pKeywords:
Inflation, Available money, Hyperinflation, SeigniorageAbstract
This study aims at the relationships between inflation and availability of money in Venezuela from 2005-1 to 2018-2. Based on quantitative theory of money, this descriptive and explanatory study, with polinomial regressions and total and marginal functions, studied the relations between money and the monetary base, the government income by seigniorage. It also approaches a demand of money equation for Venezuela in the context of hyperinflation. The research shows that the average inter-quarterly variation rate of the monetary base in the period under study is higher than that of the monetary liquidity and the coins and bills in circulation, producing therefore a fall in the available cash in the hands of the banking entities in the last 5 quarters, as well as the demand for money in the last 10 quarters. All this is thanks to BCV (Central Bank of Venezuela) expansive monetary policy in the analyzed period, which has resulted in an average inflation rate of 30% quarter-on-quarter, favoring a hyperinflationary process in recent years 3 quarters of the five years studied; where all the new liabilities (Monetary Base) created by the BCV are supported by securities in foreign currencies and national currency representing up to 89% of its assets by the end of 2017.
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