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Currency substitution and the transactions demand for money in Vietnam

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Author Info

  • Michaël GOUJON

    ()
    (Centre d'Etudes et de Recherches sur le Développement International)

  • Sylviane GUILLAUMONT JEANNENEY

    ()
    (Centre d'Etudes et de Recherches sur le Développement International)

  • Christopher ADAM

    ()
    (Université Oxford)

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.

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File URL: http://publi.cerdi.org/ed/2002/2002.28.pdf
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Bibliographic Info

Paper provided by CERDI in its series Working Papers with number 200228.

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Length: 22
Date of creation: 2002
Date of revision:
Handle: RePEc:cdi:wpaper:193

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Related research

Keywords: Vietnam.; Demand for Money; Currency Substitution; Dollarization;

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  1. Enders, Walter & Granger, C. W. J., 1998. "Unit Root Tests and Asymmetric Adjustment with an Example Using the Term Structure of Interest Rates," Staff General Research Papers 1388, Iowa State University, Department of Economics.
  2. Subramanian S. Sriram, 1999. "Survey of Literatureon Demand for Money," IMF Working Papers 99/64, International Monetary Fund.
  3. Adam, Christopher, 1999. "Financial Liberalisation and Currency Demand in Zambia," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(3), pages 268-306, October.
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  5. Sylviane Guillaumont Jeanneney, 1994. "La politique économique en présence de substitution de monnaies," Revue Économique, Programme National Persée, vol. 45(3), pages 349-368.
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  8. Mohsen Bahmani-Oskooee & Miquel-Angel Galindo Martin & Farhang Niroomand, 1998. "Exchange rate sensitivity of the demand for money in Spain," Applied Economics, Taylor & Francis Journals, vol. 30(5), pages 607-612.
  9. Adam, Christopher, 1992. "On the Dynamic Specification of Money Demand in Kenya," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 1(2), pages 233-70, August.
  10. Claudia Buch, 2001. "Money demand in Hungary and Poland," Applied Economics, Taylor & Francis Journals, vol. 33(8), pages 989-999.
  11. Eu Chye Tan, 1997. "Money demand amid financial sector developments in Malaysia," Applied Economics, Taylor & Francis Journals, vol. 29(9), pages 1201-1215.
  12. Robert Dekle & Mahmood Pradhan, 1997. "Financial Liberalization and Money Demand in Asean Countries," IMF Working Papers 97/36, International Monetary Fund.
  13. Abdur Chowdhury, 1997. "The financial structure and the demand for money in Thailand," Applied Economics, Taylor & Francis Journals, vol. 29(3), pages 401-409.
  14. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
  15. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
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