Currency Substitution in a Currency Board Context: The Evidence for Hong Kong
Hong Kong is an open economy that uses foreign currencies extensively in domestic payments. This paper focuses on substitution between the domestic and foreign currencies in their role as media of payments in such an economy. It uses quarterly data to estimate currency substitution (CS) for Hong Kong during 1984:I to 2001:III when it had a fixed exchange rate under a currency board system. Two models, a money demand function and a dynamic adjustment model, are estimated using the Johansen cointegration and error-correction technique. The estimates for both these models indicate significant CS in the media of payments. Our estimates also show a significant ratchet effect in CS.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 4 (2006)
Issue (Month): 1 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/RCEA20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RCEA20|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lewis, Mervyn K. & Mizen, Paul D., 2000. "Monetary Economics," OUP Catalogue, Oxford University Press, number 9780198290629, December.
- Joannes Mongardini & Johannes Mueller, 2000.
"Ratchet Effects in Currency Substitution: An Application to the Kyrgyz Republic,"
IMF Staff Papers,
Palgrave Macmillan, vol. 47(2), pages 3.
- Joannes Mongardini & Johannes Mueller, 1999. "Rachet Effects in Currency Substitution; An Application to the Kyrgyz Republic," IMF Working Papers 99/102, International Monetary Fund.
- Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
- Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
When requesting a correction, please mention this item's handle: RePEc:taf:jocebs:v:4:y:2006:i:1:p:39-56. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.