Money Demand in Dollarized Economies: The Case of Iran

Document Type : Research Paper

Authors

1 MA. Student, Department of Economics, Payame Noor University, Ramsar

2 Assistance Professor, Department of Economics, University of Sistan and Baluchestan

Abstract

Money demand in dollarized economies appears to be highly unstable and the model making it very difficult to forecast. This paper utilizes cointegrating analysis and application "Autoregressive Distributed Lag Method"(ARDL), the money demand function measured of the Iran dollarized economy. The study findings represent a long-term stable equilibrium relationship between real money demand and variables, GDP, the exchange rate on the informal market, inflation and ratchet. The results of this study indicate the occurrence dollarization and irreversibility of it’s in the Iranian economy, because coefficients for the exchange rate and ratchet variable are negative and significant in the demand for money.

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History

  • Receive Date: 17 February 2013
  • Revise Date: 12 October 2014
  • Accept Date: 03 June 2014

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