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Is There Currency Substitution in Korea?

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  • S. R. Lee

Abstract

This paper examines the existence of currency substitution in Korea. By examining the money demand in Korea using quarterly 3-month forward exchange rate premium as a proxy for expected change in exchange rate, this paper concludes that currency substitution does not exist in Korea during the post financial crisis period after 1997. Monetary independence under a flexible exchange rate system appears to hold in Korea.

Suggested Citation

  • S. R. Lee, 2010. "Is There Currency Substitution in Korea?," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 13(3), pages 243-249, September.
    • Handle: RePEc:sae:intare:v:13:y:2010:i:3:p:243-249
    DOI: 10.1177/223386591001300313
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    References listed on IDEAS

    as
    1. Klein, Benjamin, 1974. "Competitive Interest Payments on Bank Deposits and the Long-Run Demand for Money," American Economic Review, American Economic Association, vol. 64(6), pages 931-949, December.
    2. Miles, Marc A, 1978. "Currency Substitution, Flexible Exchange Rates, and Monetary Independence," American Economic Review, American Economic Association, vol. 68(3), pages 428-436, June.
    3. Bordo, Michael D & Choudhri, Ehsan U, 1982. "Currency Substitution and the Demand for Money: Some Evidence for Canada," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 14(1), pages 48-57, February.
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    Keywords

    Currency; Substitution; Korea;
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