Money Demand in the Dominican Republic
AbstractThis paper investigates a demand for money relationship for the dominican Republic. The financial system of the Dominican Republic is underdeveloped, and there are no suitable domestic data on the opportunity cost of holding money. Economic links with the US suggest a possible role for a foreign interest rate effect and a currency substitution effect in the demand for domestic money. A long-run demand for money-relationship is developed from the perspective of alternative estimation methodologies, and it is shown that a "literature standard" specification augmented by foreign monetary variables is robust. The ensuing short-run dynamic model is adequate, stable and suggests an important role for expected inflation, and a real bilateral exchange rate with the US. A number of policy implications for the Dominican Republic are drawn from the results.
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Bibliographic InfoPaper provided by Department of Economics, University of Kent in its series Studies in Economics with number 9709.
Date of creation: Nov 1997
Date of revision:
Publication status: Forthcoming in Applied Economics, 2000
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Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 764000
Fax: +44 (0)1227 827850
Web page: http://www.ukc.ac.uk/economics/
Other versions of this item:
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
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