Impact Of Redenomination On Price, Volume, And Value Of Transaction: An Experimental Economic Approach

Danti Astrini, Bambang Juanda () and Noer Azam Achsani
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Danti Astrini: IPB
Bambang Juanda: IPB
Noer Azam Achsani: IPB

Bulletin of Monetary Economics and Banking, 2016, vol. 19, issue 2, 207-238

Abstract: Redenomination is a simplification of nominal value of currency by reducing digit (zero number) without reducing the real value of the currency. This paper provide an overdownload of the impact of redenomination to changes in transaction prices, transaction value and number of transactions using experimental methods. The results showed that the most substantial price reduction on the elastic goods can occur in conditions of low economic growth and high inflation. Price reductions also occur in conditions of high economic growth and low inflation. Based on results, there is no change between before and after redenomination on the number of transactions. So redenomination would not change the number of transactions in elastic goods. Conditions which can change the value of the transaction is low growth and high growth in high inflation condition. Conditions of high inflation and low growth will decrease the value of the transaction while the condition of high inflation with high growth will increase the value of the transaction.

Keywords: Redenomination; Inflation; Economic Growth; Experiment (search for similar items in EconPapers)
JEL-codes: C91 E31 E42 E58 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:19:y:2016:i:2d:p:207-238

DOI: 10.21098/bemp.v19i2.630

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