Currency Substitution in Developing Countries: An Introduction
Summary:
This paper reviews the main policy and analytical issues related to currency substitution in developing countries. The paper discusses, first, whether currency substitution should be encouraged or not; second, how the presence of currency substitution affects the choice of nominal anchors in inflation stabilization programs; third, the effects of changes in the rate of growth of the money supply on the real exchange rate; fourth, the interaction between inflationary finance and currency substitution; and, finally, issues related to the empirical verification of the currency substitution hypothesis.
Series:
Working Paper No. 1992/040
Subject:
Currencies Demand for money Dollarization Foreign exchange Inflation Monetary policy Money Prices Real exchange rates
English
Publication Date:
May 1, 1992
ISBN/ISSN:
9781451845884/1018-5941
Stock No:
WPIEA0401992
Pages:
32
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