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Currency substitution and the demand for money in Mexico

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  • Miriam Chau RodrIGuez
  • Paul Turner

Abstract

Demand functions for broad money and foreign currency deposits are estimated using quarterly Mexican data for the period 1978:1 to 2000:4. Significant evidence is found for currency substitution in the broad money equation. While the demand function for foreign currency deposits is harder to interpret, significant evidence of substitution between domestic money balances and US$ deposits is found.

Suggested Citation

  • Miriam Chau RodrIGuez & Paul Turner, 2003. "Currency substitution and the demand for money in Mexico," Applied Economics Letters, Taylor & Francis Journals, vol. 10(1), pages 59-62.
  • Handle: RePEc:taf:apeclt:v:10:y:2003:i:1:p:59-62 DOI: 10.1080/1350485022000035868
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    References listed on IDEAS

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    Cited by:

    1. Marco Airaudo & Edward F Buffie & Luis-Felipe Zanna, 2016. "Inflation Targeting and Exchange Rate Management In Less Developed Countries," IMF Working Papers 16/55, International Monetary Fund.
    2. Ramos Francia Manuel & Noriega Antonio E. & Rodríguez-Pérez Cid Alonso, 2015. "The Use of Monetary Aggregates as Indicators of the Future Evolution of Consumer Prices: Monetary Growth and Inflation Target," Working Papers 2015-14, Banco de México.
    3. Fullerton, Thomas M., Jr. & Molina, Angel L., Jr. & Pisani, Michael J., 2009. "Peso Acceptance Patterns in El Paso," MPRA Paper 17900, University Library of Munich, Germany, revised 19 Jun 2009.
    4. 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.
    5. Yu Hsing, 2007. "Tests of the functional form, the substitution effect, and the wealth effect of Mexico´s money demand function," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO.
    6. K. Azim Özdemir & Mesut Saygili, 2013. "Economic uncertainty and money demand stability in Turkey," Journal of Economic Studies, Emerald Group Publishing, vol. 40(3), pages 314-333, July.

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