The Transactions Demand For Money In The Presence Of Currency Substitution: Evidence From Vietnam
Michael Goujon (),
Sylviane Guillaumont Jeanneney () and
Christopher Adam ()
No 200331, Working Papers from CERDI
Currency substitution – the use of foreign money to finance transactions between domestic residents – is widespread in low income and transition economies. Traditionally, however, empirical models of the demand for money tend to concentrate on the portfolio, motive for holding foreign currency, while maintaining the assumption that the income elasticity of demand for domestic money is invariant to the degree of currency substitution.. We offer a simple re-specification of the demand for money which more accurately reflects the process of currency substitution by allowing for a variable income elasticity of demand for domestic money. This specification is estimated for Vietnam in the 1990s. Using a standard cointegration framework we find evidence for currency substitution only in the long-run but well-defined wealth effects operating in the short-run.
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
Journal Article: The transactions demand for money in the presence of currency substitution: evidence from Vietnam (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cdi:wpaper:457
Access Statistics for this paper
More papers in Working Papers from CERDI Contact information at EDIRC.
Bibliographic data for series maintained by Vincent Mazenod ().