Argentina, inflation, and Phillip Cagan

The demand for money during hyperinflation was the subject of Cagan's classic study and is the foundation on which this paper is built. An introduction to the current economic situation in Argentina, by way of a brief monetary history, is presented. After correcting for an inconsistency in Cagan's model it is respecified using a moving average error term and a new variable, real income, is introduced. The new variable is shown to be signficiant but lack of data on a monthly basis resulted in speculative results when attempting to correct for autocorrelation.