Local Currency as a Development Strategy

Rajshri Jayaraman and Mandar Oak
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Rajshri Jayaraman: University of Munich

No 106, Royal Economic Society Annual Conference 2002 from Royal Economic Society

Abstract: The introduction of a local currency may serve as a signal of demand for local goods. Where demand uncertainty deters firms from investing in more productive technologies, such a signal improves the chances that technology choice will be optimal. The introduction of a local currency therefore always improves ex-ante efficiency and may lead to ex-post efficiency, with strictly higher levels of productivity and welfare.

Date: 2002-08-29
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