Hard currency and financial development

Ilan Goldfajn and Roberto Rigobon

No 438, Textos para discussão from Department of Economics PUC-Rio (Brazil)

Abstract: This paper investigates the relationship between hard currency and financial development. It creates four different series of hard currency based on different sets of data. The results of the paper suggest that indeed financial development and the hardness of currencies are highly correlated. However, we find that the relationship from currency hardness to financial development is fully captured by macro variables that represent overall macroeconomic stability. This suggest that having a hard currency is not a pre-condition for financial development but rather establishing a macroeconomic stable environment.

Pages: 37 pages
Date: 2000-12
New Economics Papers: this item is included in nep-dev and nep-ifn
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:rio:texdis:438

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