Currency Substitution in Developing Countries: An Introduction

Guillermo Calvo and Carlos Végh Gramont

No 1992/040, IMF Working Papers from International Monetary Fund

Abstract: This paper reviews the main policy and analytical issues related to currency substitution in developing countries. The paper discusses, first, whether currency substitution should be encouraged or not; second, how the presence of currency substitution affects the choice of nominal anchors in inflation stabilization programs; third, the effects of changes in the rate of growth of the money supply on the real exchange rate; fourth, the interaction between inflationary finance and currency substitution; and, finally, issues related to the empirical verification of the currency substitution hypothesis.

Keywords: WP; currency substitution; foreign currency; substitution hypothesis; medium of exchange; currency substitutability; currency-substitution problem; dollarization process; nominal interest rate; domestic money; inflation rate; Dollarization; Currencies; Inflation; Demand for money; Real exchange rates (search for similar items in EconPapers)
Pages: 32
Date: 1992-05-01
References: Add references at CitEc
Citations: View citations in EconPapers (155)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=790 (application/pdf)

Related works:
Working Paper: Currency Substitution in Developing Countries: An Introduction (1992)
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:imf:imfwpa:1992/040

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().