MONEY DEMAND AND INFLATION IN YUGOSLAVIA, 1980-1989

After discussing the relevant historical and institutional background to Yugoslav monetary and inflationary experiences, 1980-1989, Cagan's hyperinflation model is tested using an econometric technique which is unrestrictive with respect to assumptions concerning expectations for mation. We also examine the hypothesis that the expected return to hol ding foreign assets was an important determinant of domestic money hol ding; test alternative hypotheses of expectations formation; and test a buffer-stock version of the Cagan model. The results support the Cag an model (especially but not exclusively when coupled with an adaptive -regressive expectations mechanism) as a description of the salient fe atures of the data.