Lost In Monetary Translation: Monetary Singleness and Relative Price Distortions

Kazuko Kano and Takashi Kano

No HIAS-E-155, Discussion paper series from Hitotsubashi Institute for Advanced Study, Hitotsubashi University

Abstract: This paper studies how currency conversion can disrupt relative prices by impairing the unit-ofaccount function of money. We examine Okinawa’s 1972 conversion from the U.S. dollar to the Japanese yen, following the collapse of a previously shared unit-of-account triggered by the Nixon shock. Using wholesale price data for perishable goods, we showthat relative prices exhibited sharp changes despite flexible prices. By contrast, Okinawa’s 1958 currency conversion used a single, clearly announced rate and left relative prices stable. The comparison highlights the importance of institutional clarity for a shared unit of account and stable relative prices.

Keywords: Unit of Account; Monetary Singleness; Relative Price Distortion; Currency Conversion; Okinawa Reversion (search for similar items in EconPapers)
JEL-codes: D40 E31 E42 N15 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2026-01-24
New Economics Papers: this item is included in nep-ifn and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hiasdp:hias-e-155

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