Demand for Money and the Black Market Exchange Rate Expectations: Further Empirical Evidence

Hamid Tabesh
Additional contact information
Hamid Tabesh: University of Wisconsin-River Falls

Journal of Economic Insight, 2000, vol. 26, issue 2, 1-9

Abstract: This paper explores the impact of the black market exchange rate expectations on the demand for money in Iran. In the post-revolution era, Iran has imposed a great deal of restriction on the exchange market. The restrictions were so severe that in the period 1979-89, the nation basically was a closed economy. However, as the exchange market restrictions intensified, an active underground exchange market emerged in which key currencies in general and the U.S. dollar in particular, were exchanged several-fold higher than the official rate. The findings suggest that in the sample period 1959-94, demand for real cash balances has been significantly affected by the expected black market exchange rate. Further, the results of a cointegration test provide ample evidence that the expected appreciation/depreciation in the black market exchange rate, real income, and the rate of inflation jointly determine the demand for real M2-money in Iran.

JEL-codes: E41 (search for similar items in EconPapers)
Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (2)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mve:journl:v:26:y:2000:i:2:p:1-9

Access Statistics for this article

Journal of Economic Insight is currently edited by Christopher Douglas and Joshua Lewer

More articles in Journal of Economic Insight from Missouri Valley Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Cullen Goenner ().