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Current Substitition and Money Demand in the United States, West Germany and Japan

Current Substitition and Money Demand in the United States, West Germany and Japan
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Year:    1989

Author:    Baade, Robert A., Nazmi, Nader

Credit and Capital Markets – Kredit und Kapital, Vol. 22 (1989), Iss. 3 : pp. 363–374

Abstract

Currency Substitution and Money Demand in the United States, West Germany and Japan

Money demand equations for the United States that predicted well during the late 1950s and throughout the 19605 began to significantly overpredict money demand in 1974. This “missing money” puzzle inspired a myriad of explanations. Since the adoption of floating exchange rates coincided with dollar demand overpredictions, one explanation has focused on a growing tendency to substitute other currencies for dollars in international portfolios. The purpose of this paper is to test the currency substitution thesis. The authors concluded that while there was a structural shift in the demand for money, perhaps induced by currency substitution among countries analyzed, currency substitution at best only partially explains dollar overpredictions.

Journal Article Details

Publisher Name:    Global Science Press

Language:    Multiple languages

DOI:    https://doi.org/10.3790/ccm.22.3.363

Credit and Capital Markets – Kredit und Kapital, Vol. 22 (1989), Iss. 3 : pp. 363–374

Published online:    1989-03

AMS Subject Headings:    Duncker & Humblot

Copyright:    COPYRIGHT: © Global Science Press

Pages:    12

Author Details

Baade, Robert A.

Nazmi, Nader

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Section Title Page Action Price
Robert A. Baade/Nader Nazmi: Currency Substitution and Money Demand\rin the United States, West Germany and Japan 363
I. Theory and Evidence Relating to the Currency Substitution Hypothesis 364
II. Test Results Relating to Money Demand in Germany, Japan and the United Stated 366
III. Testing For Currency Substitution 369
IV. Summary and Conclusions 371
Bibliography 372
Zusammenfassung: Währungssubstitution und Geldnachfrage in den USA, Deutschland und Japan 373
Summary: Currency Substitution and Money Demand in the United States, West Germany and Japan 373
Résumé: La substitution de monnaie et la demande monétaire aux Etats Unis, en République fédérale d'Allemagne et au Japon 374