Volume 22, Issue 3 (2022)
QJER 2022, 22(3): 59-78 |
Back to browse issues page
Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
eskandari sabzi S. Factors Affecting Currency Substitution in Iran: With Emphasis on Inflation Uncertainty. QJER 2022; 22 (3) : 3
URL: http://ecor.modares.ac.ir/article-18-59076-en.html
URL: http://ecor.modares.ac.ir/article-18-59076-en.html
Assistant Professor of Economics, Miyaneh Branch, Islamic Azad University, Miyaneh, Iran , si.eskandari@iau.ac.ir
Abstract: (1199 Views)
High and unpredictable inflation rates reduce the demand for domestic money and increase the demand for alternative assets such as foreign currency. Currency substitution is a situation in which foreign currency is replaced for domestic money in doing monetary functions. The purpose of this article is to investigate the factors affecting currency substitution in Iran, with emphasis on inflation uncertainty. For this purpose, based on the data of 1978-2018, the degree of currency substitution is obtained using the Kamin-Ericsson (2003) method and the EGARCH model is used to calculate inflation uncertainty. The estimation of an autoregressive distributed lag model show that in the short- and long-run, rising inflation leads to increased currency substitution. Inflation uncertainty in the short run increases currency substitution after three lags. In the long run, inflation uncertainty has a positive relationship and economic growth has a significant inverse relationship with currency substitution. Given the impact of inflation and its uncertainty on currency substitution, inflation control policies should be considered by policymakers.
Article number: 3
Article Type: Original Research |
Subject:
Macroeconomics and Monetary Economics
Received: 2022/01/27 | Accepted: 2022/03/14 | Published: 2022/09/7
Received: 2022/01/27 | Accepted: 2022/03/14 | Published: 2022/09/7
Send email to the article author
| Rights and permissions | |
 |
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. |