Monetary disorder and financial regimes: the demand for money

Argentina is a unique experience of protracted monetary disorder. In the frame-work of a long-term view, we investigate the demand for narrow money and the welfare cost of inflation in Argentina from 1900 to 2006. The paper examines the ef-fect of monetary regimes by dealing with the presence of structural breaks in long-run equations. We estimate and test for regime changes through a sequential approach and we embed breaks in cointegrating single-equation models. Though our estimated models are comparable with those reported for industrialized countries, significant breaks appear consistent with major policy shocks occurred in Argentina during th