In theories constructed to explain the effect of the money supply on the price level, some form of the demand for money function is generally assumed. In fact, when the demand for money function and other relevant relationships are specified, the system must possess the property implied by general equilibrium theory that, in a truly ceteris paribus situation, a 1 percent increase in the quantity of money produce a 1 percent rise in the general price level after all lagged adjustments have worked themselves out, that is, that the elasticity of the price level with respect to the money stock be equal to 1. In his study of seven hyperinflations, Cagan (1956) derived the necessary and sufficient conditions for his assumed demand for money function to yield a money supply elasticity of the price level equal to 1 under the assumption that adjustments are instantaneous; that is, that the path of prices is the solution to a first order differential equation. In contrast to Cagan's instantaneous adjustment model, Diz (1970) in his study of the demand for money and inflation in Argentina has assumed a discrete adjustment model, but failed to derive the necessary and sufficient conditions for such a model to yield a money supply elasticity of prices equal to 1. Thus in his attempt to explain the dynamics of inflation he abandoned his estimated demand for money function in favor of an approach used by Harberger (1963) in his study of inflation in Chile; namely, expressing the rate of change in prices as a linear weighted sum of the current and lagged rates of change in the money supply, where only those variables are judged to be relevant whose sum of weights is approximately equal to 1. Both of these studies use fairly artificial means