To read the full version of this content please select one of the options below:

A Monetary Model of the Parallel Market for Foreign Exchange

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 1 April 1991


Develops and tests a monetary model of the parallel market for foreign exchange which incorporates forward‐looking expectations and currency substitution features. Econometric results using quarterly data for a group of 12 developing countries show that changes in official exchange rates and monetary disequilibria are the major determinants of the behaviour of parallel exchange rates. Changes in expected rates of return on domestic and foreign currency play a significant role only in middle‐income economies.



Agénor, P. (1991), "A Monetary Model of the Parallel Market for Foreign Exchange", Journal of Economic Studies, Vol. 18 No. 4.




Copyright © 1991, MCB UP Limited