Is the Gresham's Law Still Valid? Evidence from South American Dollarized Economies

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F47813059%3A19520%2F14%3A%230002922" target="_blank" >RIV/47813059:19520/14:#0002922 - isvavai.cz</a>
Alternative codes found
RIV/62156489:43110/14:00211002
Result on the web
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DOI - Digital Object Identifier
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Result language
angličtina
Original language name
Is the Gresham's Law Still Valid? Evidence from South American Dollarized Economies
Original language description
Greshams Law postulates a well-known causality in the economy with two circulating currencies the bad currency drives out the good one, relating to the market with metal coins with different content of precious metal. The bad currency is supposed to be spent, and the good currency to be stored. The value of money nowadays, however, is not determined by the content of silver, or other precious metal, but by the exchange rate. This paper studies the impact of nominal exchange rate volatility on banking deposits in two currencies in two parallel currency markets in South America, Chile and Argentina, where the national currency operates along with the US dollar. Using GARCH model we find that increasing volatility of nominal exchange rate affects negatively deposits in national currency and positively deposits in the US dollar, in both countries in the sample. This may be accepted as the bad currency drives out the good one application of Gresham's Law to current economic conditions.
Czech name
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Czech description
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Project
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Continuities
I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year
2014
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Article name in the collection
14th International Conference on Finance and Banking
ISBN
978-80-7248-939-8
ISSN
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e-ISSN
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Number of pages
7
Pages from-to
179-185
Publisher name
SU OPF Karviná
Place of publication
Karviná
Event location
Ostrava
Event date
Oct 16, 2013
Type of event by nationality
EUR - Evropská akce
UT code for WoS article
000345575000021

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