Hard currency and financial development
AbstractThis 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.
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Bibliographic InfoPaper provided by Department of Economics PUC-Rio (Brazil) in its series Textos para discussão with number 438.
Length: 37 pages
Date of creation: Dec 2000
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-05-02 (All new papers)
- NEP-DEV-2001-05-02 (Development)
- NEP-IFN-2001-05-02 (International Finance)
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