Money and productive efficiency - Evidence from a high-inflation country

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Başçı E., Mahmud S. F., Yucel E. M.

EMERGING MARKETS FINANCE AND TRADE, vol.43, no.1, pp.64-73, 2007 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 43 Issue: 1
  • Publication Date: 2007
  • Doi Number: 10.2753/ree1540-496x430103
  • Journal Name: EMERGING MARKETS FINANCE AND TRADE
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.64-73
  • Keywords: high inflation, inventories, manufacturing, money demand by firms, stochastic frontier estimation, Turkey, RELATIVE PRICE VARIABILITY, REAL CASH BALANCES, UNITED-STATES, FRONTIER, LIQUIDITY, ECONOMY, MODEL
  • TED University Affiliated: No

Abstract

This paper examines how money balances held by manufacturing firms affect their efficiency in generating sales revenue in a high-inflation economy. The analysis employs data from Turkish firms to estimate a stochastic frontier model, finding a strong positive association between the firms' money holdings and their efficiency. However the role of money balances seems to diminish as firms hold higher raw material inventories.