Currency Substitution and the Hysteresis Effect: An Empirical Application for Argentina

Patricio Temperley

Ensayos Económicos, 2022, vol. 1, issue 79, 40-65

Abstract: In economies with large exchange rate fluctuations and macroeconomic instability, currency substitution is a highly important phenomenon. The Argentine case is studied through the inclusion of a ratchet variable, which accounts for the hysteresis effect —irreversibility in the currency substitution process—, for 2003-2019. To that end, an ARDL (Autorregresive Distributed Lag) model was used, where it was found that the hysteresis effect is persistent in the long run. This has implications to conduct monetary policy and regarding the stability of the demand for money.

Keywords: balance of payments; dollarization; dollar liquidity; emerging markets; money supply; currency substitution; demand for money; hysteresis effect; ratchet variable (search for similar items in EconPapers)
JEL-codes: C32 E41 E44 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.bcra.gov.ar/Institucional/DescargaPDF/DownloadPDF.aspx?Id=1053 Spanish version (versión en Español) (application/pdf)

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:bcr:ensayo:v:1:y:2022:i:79:p:40-65

Access Statistics for this article

Ensayos Económicos is currently edited by Germán Feldman

More articles in Ensayos Económicos from Central Bank of Argentina, Economic Research Department Contact information at EDIRC.
Bibliographic data for series maintained by Federico Grillo ().