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Currency substitution and money demand in Euroland

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  • Miguel Lebre de Freitas

    ()
    (Universidade de Aveiro and NIPE)

Abstract

This papers tests the stability of the demand for money in the euro area in the context of an open economy. A sample consisting of quarterly data covering the 1982:2-1999:3 period is considered. The main finding is that the US long term rate of interest plays a significant role in the European money demand relationship. This result holds for different combinations of variables forming the vector auto-regressive system and suggests that currency substitution vis-à-vis the US dollar may be an important factor influencing the ECB monetary policy.

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Bibliographic Info

Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 11/2003.

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Date of creation: 2003
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Handle: RePEc:nip:nipewp:11/2003

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Keywords: EMU; Money Demand; International Currencies; Currency Substitution.;

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References

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Cited by:
  1. Leland B. Yeager, 2004. "The Euro Facing Other Moneys," Cato Journal, Cato Journal, Cato Institute, vol. 24(1-2), pages 27-40, Spring/Su.
  2. Harrison , Barry & Vymyatnina, Yulia, 2007. "Currency substitution in a de-dollarizing economy: The case of Russia," BOFIT Discussion Papers 3/2007, Bank of Finland, Institute for Economies in Transition.
  3. repec:cto:journl:v:24:y:2004:i:1-2:p:27-40 is not listed on IDEAS

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