## The Currency Substitution Hypothesis and Relative Money Demand in Mexico and Canada |

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ADF test alternative explanations anomalous autocorrelation Autoregression Bordo and Choudri Canadian dollar Canadian models capital flight capital mobility central bank coefficients on lagged cointegrating regression column conventional currency substitution convertibility risk hypothesis converting Mexdollars Cuddington currency substitution hypothesis Daniel and Fried demand for dollars demand for Mexdollars dependent variable deposits held depreciation is associated depreciation is high domestic currency DUM3DE1 Econometrica Econometrics error-correction model exchange rate expected peso depreciation expected rate first-differences foreign reserves forward exchange rate Heteroscedasticity higher expected depreciation holding Mexdollars interest rate lagged expected depreciation Lagrange Multiplier Mark Watson Mexdollar accounts Mexican Mexico and Canada model estimated monetary base money demand equation Note number of lags Ortiz peso demand deposits postal strikes Ramirez-Rojas 1985 rate of depreciation Rational Expectations relative demand relative money demand reserves run low residuals Sargan single-equation models Sparse Parameterizations spurious correlation table 6A U.S. dollar deposits unit roots Wijnbergen