Convertibility Risk : The Precautionary Demand for Foreign Currency in a Crisis /

This paper presents theoretical work linking money demand to the perceptions of households about the risk that domestic currency may become inconvertible or that it may be devalued. An empirical investigation of the size of this effect is carried out using both cross section data and then monthly da...

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Bibliographic Details
Main Author: Mourmouras, Alex
Other Authors: Black, Stabley, Christofides, Charalambos
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 2001.
Series:IMF Working Papers; Working Paper ; No. 2001/210
Online Access:Full text available on IMF
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245 1 0 |a Convertibility Risk :   |b The Precautionary Demand for Foreign Currency in a Crisis /  |c Alex Mourmouras, Stabley Black, Charalambos Christofides. 
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300 |a 1 online resource (29 pages) 
490 1 |a IMF Working Papers 
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500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
506 |a Electronic access restricted to authorized BRAC University faculty, staff and students 
520 3 |a This paper presents theoretical work linking money demand to the perceptions of households about the risk that domestic currency may become inconvertible or that it may be devalued. An empirical investigation of the size of this effect is carried out using both cross section data and then monthly data for Korea to estimate an augmented demand for money equation. It is found that the fear of inconvertibility arising from the 1997 Korean currency crisis may have caused broad money demand to fall by 4-5 percentage points, equivalent to the loss of reserves of USD 6-72 billion (or about 30 percent of reserves as measured at end-November 1997). 
538 |a Mode of access: Internet 
700 1 |a Black, Stabley. 
700 1 |a Christofides, Charalambos. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2001/210 
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