Currency substitution in developing countries: An introduction

• Guillermo A. Calvo ^[1] ; Carlos A. Vegh ^[1]
  1. [1] International Monetary Fund
• Localización: Revista de análisis económico, ISSN-e 0718-8870, ISSN 0716-5927, Vol. 7, Nº 1 (Editores Invitados: Guillermo Calvo y Carlos Vegh), 1992, págs. 3-27
• Idioma: inglés
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• Resumen

  • 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.