Currency substitution and the demand for money in less developed countries: an application to the Caribbean

Author(s): Haynes, Cleviston; Worrell, DeLisle (1987)

Created 24 Jul, 1987
Categories Working Papers
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This paper assesses the statistical significance of currency substitution in two Caribbean economies - Barbados and Jamaica. A model of the demand for money and interest bearing deposits is presented. The explanatory variables, which all feature in previous models of a symmetrical currency substitution, include income, local and foreign interest rates and domestic and foreign rates of inflation. It concludes with empirical results.

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