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Currency substitution and the transactions demand for money in Vietnam

Author

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  • Michaël GOUJON

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

  • Sylviane GUILLAUMONT JEANNENEY

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

  • Christopher ADAM

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.

Suggested Citation

  • Michaël GOUJON & Sylviane GUILLAUMONT JEANNENEY & Christopher ADAM, 2002. "Currency substitution and the transactions demand for money in Vietnam," Working Papers 200228, CERDI.
    • Handle: RePEc:cdi:wpaper:193
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