Dollarisation and overshooting in the Congo during the 1990s, an empirical estimate

E.m.K. Mambu

International Journal of Economic Policy in Emerging Economies, 2009, vol. 2, issue 4, 415-425

Abstract: During the 1990s, whenever inflation accelerated in the Congo (Dem. Rep.) the domestic currency was abandoned in favour of dollar holdings. The increased demand for dollars resulted in a higher relative price of the latter or greater depreciation of domestic currency, which is the essence of exchange rate overshooting. In demand terms, there was a greater preference for foreign currencies than for goods. Unlike the Dornbusch model, the 1990s exchange rate overshooting associated with dollarisation in Congo assumes no price rigidity. It suggests, instead, that both prices and the exchange rate did adjust speedily to changes in the money supply.

Keywords: hyperinflation; dollarisation; exchange rate overshooting; local currency; foreign currency; currency notes; bank deposits; broad money; velocity of circulation; Congo; inflation; money supply changes. (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=30940 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijepee:v:2:y:2009:i:4:p:415-425

Access Statistics for this article

More articles in International Journal of Economic Policy in Emerging Economies from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().