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Money demand and currency and asset substitucion in Venezuela: 1997-2008

Author

Listed:
  • Alberto Gregorio Castellano Montiel

    (Investigador del Instituto de Investigaciones de la Facultad de Ciencias Económicas y Sociales. Universidad del Zulia, Ciudad Universitaria “Dr Antonio Borjas Romero”, Núcleo Humanístico. Avenida Goajira. Sector Ziruma, Maracaibo, Venezuela. Apartado Postal 526.)

Abstract

This study aims to estimate, using quarterly data, a money demand function for Venezuela with the phenomena of currency substitution (CS) and asset substitution (AS) during the period 1997(1)-2008(4). This model is based on the one proposed by Cuddington (1983) and modified by Mizel and Pentecost (1994). The empirical evidence shows that during the period the phenomenon of dollarization is present. There has been a change in the functions of money as a store of value (AS) and as a medium of exchange (CS) when M2 is used. In aggregates more liquid (M1) dollarization is observed only for currency substitution.

Suggested Citation

  • Alberto Gregorio Castellano Montiel, 2012. "Money demand and currency and asset substitucion in Venezuela: 1997-2008," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 37(34), pages 89-120, july-dece.
    • Handle: RePEc:ula:econom:v:37:y:2012:i:34:p:89-120
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    References listed on IDEAS

    as
    1. Pedauga, Luis Enrique & Sáez, Francisco & Velázquez, Agustín, 2012. "Simulación de un modelo de equilibrio general computable para Venezuela," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(314), pages 415-448, abril-jun.
    2. Cuddington, John T. & Cuddington, John T., 1983. "Currency substitution, capital mobility and money demand," Journal of International Money and Finance, Elsevier, vol. 2(2), pages 111-133, August.
    3. Calvo, Guillermo & Vegh, Carlos, 1992. "Currency Substitution in Developing Countries: An Introduction," MPRA Paper 20338, University Library of Munich, Germany.
    4. Claudia Arguedas & Jorge Requena Blanco, 2002. "La dolarización en Bolivia: Una estimación de la elasticidad de sustitución entre monedas," Revista de Análisis del BCB, Banco Central de Bolivia, vol. 5(2), pages 7-42, December.
    5. Mizen, Paul & Pentecost, Eric J, 1994. "Evaluating the Empirical Evidence for Currency Substitution: A Case Study of the Demand for Sterling in Europe," Economic Journal, Royal Economic Society, vol. 104(426), pages 1057-1069, September.
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    More about this item

    Keywords

    Dollarization; demand for money; currency substitution; asset substitution.;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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