Modeling the currency issue
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This paper, which includes a critique of an article that appeared in the [New Zealand]Reserve Bank Bulletin, considers the difficulties of building a forecasting model of the optimum structure of the currency (that is, notes and coins) in circulation. The reviewed model leads to predictions that are not consistent with recent experience and there are theoretical objections to the specification of both the independent and the dependent varibles. Alternative approaches are explored, but the conclusion is that this aspect of money is probably not amenable to mathematical modeling.
KeywordsMathematical Modeling International Economic Public Finance Recent Experience Forecast Model
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