Parallel Currency Markets in Developing Countries: Theory, Evidence, and Policy Implications

International Monetary Fund

No 1990/114, IMF Working Papers from International Monetary Fund

Abstract: The paper reviews recent theoretical and empirical developments in the analysis of informal currency markets in developing countries. The basic characteristics of these markets are highlighted, and alternative analytical models to explain them are discussed. The implications for exchange rate policy —including imposition of foreign exchange restrictions, devaluation, and unification of exchange markets— in countries with a sizable parallel market are also examined.

Keywords: WP; foreign currency; market premium; currency market; exchange market unification; rate of depreciation; parallel market; market rate; Currency markets; Exchange rates; Currencies; Multiple currency practices; Asia and Pacific; Middle East; Caribbean (search for similar items in EconPapers)
Pages: 52
Date: 1990-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1990/114

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