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Currency substitution, financial innovations and money demand

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  • Virén, Matti

Abstract

This paper presents some Finnish evidence on the importance of currency substitution and financial innovations for money demand. It is also shown that conventional demand for money specifications which do not take these factors into account are clearly misspecified and produce unreasonable results. The problem is particularly acute for narrow concepts of money.

Suggested Citation

  • Virén, Matti, 1989. "Currency substitution, financial innovations and money demand," Bank of Finland Research Discussion Papers 31/1989, Bank of Finland.
    • Handle: RePEc:zbw:bofrdp:rdp1989_031
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    References listed on IDEAS

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    1. McKinnon, Ronald I, 1982. "Currency Substitution and Instability in the World Dollar Standard," American Economic Review, American Economic Association, vol. 72(3), pages 320-333, June.
    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. repec:bla:scandj:v:86:y:1984:i:4:p:423-39 is not listed on IDEAS
    4. Koskela, Erkki & Viren, Matti, 1987. "Inflation, Hedging and the Demand for Money: Some Empirical Evidence," Economic Inquiry, Western Economic Association International, vol. 25(2), pages 251-265, April.
    5. Marquez, Jaime, 1987. "Money demand in open economies: A currency substitution model for Venezuela," Journal of International Money and Finance, Elsevier, vol. 6(2), pages 167-178, June.
    6. Stephen M. Goldfeld, 1973. "The Demand for Money Revisited," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(3), pages 577-646.
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