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Currency substitution and the transactions demand for money in Vietnam

Michael Goujon (), Sylviane Guillaumont Jeanneney () and Christopher Adam ()

No 200228, Working Papers from CERDI

Abstract: We estimate the demand for money in Vietnam during the 1990s within a framework which distinguishes between currency substitution and portfolio dimensions of dollarization. This leads to a representation for the demand function in which the long-run income elasticity of demand is no longer constant but is a function of the expected rate of depreciation. We find evidence for currency substitution only in the long-run, and for portfolio effects only in the short-run. We interpret this as being consistent with the existence of costs associated with changing the transactions technology.

Keywords: Dollarization; Currency Substitution; Demand for Money; Vietnam. (search for similar items in EconPapers)
Date: 2002
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