publication . Article . 1989

Asset Substitution, Money Demand, and the Inflation Process in Brazil

Charles W. Calomiris; Ian Domowitz;
Open Access
  • Published: 01 Jan 1989 Journal: Journal of Money, Credit and Banking, volume 21, page 78 (issn: 0022-2879, Copyright policy)
  • Publisher: JSTOR
Abstract
Various domestic financial assets in Brazil have provided relatively liquid nonmonetary alternatives. Monthly money demand estimates, which include domestic asset opportunity costs and take account of T-bill repurchase agreements in a dynamic error-correction model, demonstrate the importance of domestic substitutes in explaining money holdings. Money demand appears responsive and stable. Moreover, T-bills and indexed bonds have acted as an alternative to central bank liabilities as a source of finance for government deficits. Evidence indicates that the initial financing of government deficits through bonds, bills, and other nonmonetary liabilities may explain ...
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Subjects
free text keywords: Economics and Econometrics, Accounting, Finance, Money market, Demand deposit, Economics, Money measurement concept, Inflation, media_common.quotation_subject, media_common, Repurchase agreement, Endogenous money, Monetary economics, Velocity of money, Open market operation
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