Currency Substitution And The Demand For Money In The Arab Maghreb

Abstract

The purpose of this paper is to estimate the demand for money for Al-Maghreb Al-Arabi countries by taking into account the currency substitution and rational expectation over the period 1964 to 1987.  The results indicate that currency substitution exists in Morocco, Libya, and Mauritania; whereas it is absent from Algeria and Tunisia.  The pooled data for the five counties indicate that currency substitution is not an important factor in determining money demand.