Dollarization and money demand stability in Bolivia

Casto Martin Montero Kuscevic, Darius Daniel Martin


This paper investigates the long-run money demand stability in Bolivia over the period 1990-2014 using a variety of estimators, namely, dynamic OLS, fully modified OLS, and canonical co-integrating regressions. Our results are robust and reveal that long-run money demand instability has been reversed even with persistent inflation volatility. We also show that de-dollarization is associated with money demand stabilization.

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ISSN: 2254-4380