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Title: |
Currency Substitution: A Multicurrency Study
for Canada |
| Author: |
Bana, Ismail
Mahomed; Handa, Jagdish |
| Author
Affiliation: |
McGill U |
| Source: |
International Economic Journal, Autumn 1987, v. 1, no. 3, pp. 71-86 |
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Publication Date: |
Autumn 1987 |
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Abstract: |
In this paper we examine currency
substitution in Canadian money demand vis-a-vis the currencies of seven
industrialized countries. A multicurrency variant of the money demand
function is estimated to test for the presence and extent of this
substitution. The results (except for the British pound) conform to
expectations and show complementarity between currencies. It is also
found that the degree of currency substitution under flexible rates
exceeds that under fixed rates. We also question the validity of the
tests for the presence of currency substitution which do not distinguish
between exchange rate regimes. |
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