The Impact of Exchange Rate on Demand for Money in Iran
Abstract: Central banks have long been interested in obtaining precise estimations of money demand given the fact that the evolution of money demand plays a key role over several monetary variables. One implication of currency substitution is that the exchange rate could serve as another determinant...
| الحاوية / القاعدة: | International Journal of Business and Development Studies |
|---|---|
| التنسيق: | مقال |
| اللغة: | الإنجليزية |
| منشور في: |
University of Sistan and Baluchestan
2013-04-01
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| الموضوعات: | |
| الوصول للمادة أونلاين: | https://ijbds.usb.ac.ir/article_1498_917f3400f9102cd0cfc73305c72fee4d.pdf |
| _version_ | 1857001765064409088 |
|---|---|
| collection | DOAJ |
| container_title | International Journal of Business and Development Studies |
| description | Abstract: Central banks have long been interested in obtaining precise estimations of money demand given the fact that the evolution of money demand plays a key role over several monetary variables. One implication of currency substitution is that the exchange rate could serve as another determinant of the demand for money. Due to the recent currency crisis in Iran, it would be important to investigate the phenomenon of currency substitution. By using quarterly data from Iran during 1990Q2 to 2013Q1 and the Generalized Method of Moments approach, we show that exchange rate in addition to real GDP, Inflation, lagged monetary aggregate has effect on the demand for real m2 in Iran. We found that income and lagged monetary aggregate elasticities are positive while the exchange rate elasticity and inflation coefficient are negative. This indicates that inflation and depreciation of domestic currency decreases the demand for money. |
| format | Article |
| id | doaj-art-c3cd99e3209146f892006c2a1eef94fa |
| institution | Directory of Open Access Journals |
| issn | 2538-3302 2538-3310 |
| language | English |
| publishDate | 2013-04-01 |
| publisher | University of Sistan and Baluchestan |
| record_format | Article |
| spelling | doaj-art-c3cd99e3209146f892006c2a1eef94fa2025-08-19T19:49:51ZengUniversity of Sistan and BaluchestanInternational Journal of Business and Development Studies2538-33022538-33102013-04-0151396010.22111/ijbds.2013.14981498The Impact of Exchange Rate on Demand for Money in IranAbstract: Central banks have long been interested in obtaining precise estimations of money demand given the fact that the evolution of money demand plays a key role over several monetary variables. One implication of currency substitution is that the exchange rate could serve as another determinant of the demand for money. Due to the recent currency crisis in Iran, it would be important to investigate the phenomenon of currency substitution. By using quarterly data from Iran during 1990Q2 to 2013Q1 and the Generalized Method of Moments approach, we show that exchange rate in addition to real GDP, Inflation, lagged monetary aggregate has effect on the demand for real m2 in Iran. We found that income and lagged monetary aggregate elasticities are positive while the exchange rate elasticity and inflation coefficient are negative. This indicates that inflation and depreciation of domestic currency decreases the demand for money.https://ijbds.usb.ac.ir/article_1498_917f3400f9102cd0cfc73305c72fee4d.pdfmoney demandexchange rategmmiran |
| spellingShingle | The Impact of Exchange Rate on Demand for Money in Iran money demand exchange rate gmm iran |
| title | The Impact of Exchange Rate on Demand for Money in Iran |
| title_full | The Impact of Exchange Rate on Demand for Money in Iran |
| title_fullStr | The Impact of Exchange Rate on Demand for Money in Iran |
| title_full_unstemmed | The Impact of Exchange Rate on Demand for Money in Iran |
| title_short | The Impact of Exchange Rate on Demand for Money in Iran |
| title_sort | impact of exchange rate on demand for money in iran |
| topic | money demand exchange rate gmm iran |
| url | https://ijbds.usb.ac.ir/article_1498_917f3400f9102cd0cfc73305c72fee4d.pdf |