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Author: Nienke Oomes Publisher: International Monetary Fund ISBN: 1451851936 Category : Business & Economics Languages : en Pages : 37
Book Description
Dollarization in Russia increased rapidly during the early 1990s, but failed to come down in the second half of the 1990s in spite of exchange rate stabilization. To explain this "dollarization hysteresis," this paper develops a model in which network externalities in the demand for currency can generate multiple stable steady states for the dollarization ratio. The model is estimated using a new source of data on dollar currency holdings in Russia. On the basis of these estimates, which confirm the existence of network externalities, the paper discusses several policies that could result in a permanent decrease in dollarization.
Author: Nienke Oomes Publisher: International Monetary Fund ISBN: 1451851936 Category : Business & Economics Languages : en Pages : 37
Book Description
Dollarization in Russia increased rapidly during the early 1990s, but failed to come down in the second half of the 1990s in spite of exchange rate stabilization. To explain this "dollarization hysteresis," this paper develops a model in which network externalities in the demand for currency can generate multiple stable steady states for the dollarization ratio. The model is estimated using a new source of data on dollar currency holdings in Russia. On the basis of these estimates, which confirm the existence of network externalities, the paper discusses several policies that could result in a permanent decrease in dollarization.
Author: Publisher: ISBN: Category : Languages : en Pages :
Book Description
The Federal Reserve Bank of Philadelphia presents the full text of the 1997 working paper entitled "Dollarization Hysteresis and Network Externalities: Theory and Evidence from an Informal Bolivian Credit Market," written by Bettina Peiers and Jeffrey M. Wrase. The text is available in PDF format. This paper examines network externalities from currency acceptability as a determinant of observed persistence of dollarization in Latin American countries and develops a model. The authors find that credible exchange rate stabilization policy alone is not sufficient to achieve dollarization reversal.
Author: Paul Reding Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
It is a known fact that the use of foreign currency by domestic residents shows significance persistence, even hysteresis. Temporary changes in the inflation rate can have permanent effects on the degree of currency substitution, as illustrated by the case of Bolivia, where dollarization has remained at a particularly high level after stabilization. The paper presents a simple model of currency substitution with network effects among agents with heterogeneous transaction costs. A network of foreign currency users reduces transactions costs for all prospective users of this currency. The strength of the network effects increases with size, which is defined as the number of agents whose foreign currency balances are larger than a given threshold. The network's size is endogenously determined. Its dynamics and the possibility of multiple equilibria generate patterns of currency substitution which exhibit persistence and hysteresis.
Author: Neven T. Valev Publisher: ISBN: Category : Languages : en Pages : 28
Book Description
It is widely documented that currency substitution (using foreign money in transactions) increases in periods of high inflation but does not decline once inflation is reduced. The paper uses survey data from Bulgaria, which experienced this phenomenon, to investigate the origins of this ratchet effect. We find that expected devaluation of the domestic currency, while relatively high, does not play a major role in sustaining the dollarization of transactions. Conversely, preferences for the use of foreign money are strongly influenced by people's perception that foreign money is already widely used in the economy.
Author: Jooyung Lee Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This paper quantitatively analyzes the current status of North Korean consumer payment instruments through a questionnaire survey of 292 North Korean defectors. In the 2010s, it was found that the payment experience ratio of domestic currency cash and grain decreased, while the payment experience ratio of foreign currency cash increased. The use of foreign currency reached a stage where it was spread not only as a store of value but also as a medium of exchange. However, the most frequently used payment instrument by North Korean consumers was still domestic currency cash. By region, in inland urban areas both domestic currency cash and U.S. dollars are used and in the North Korea-China border region both domestic currency cash and Chinese yuan are used, while in inland rural areas dollarization does not occur because both domestic currency cash and grain are used. Meanwhile, despite the stable price trend during 2013-2019, the dollarization hysteresis effect is appearing, and both the purchasing power risk theory and the network externality theory are considered to have explanatory power for the cause. The results of this paper suggest that as dollarization is intensifying, it is expected that more costs such as shortages of commodities will be incurred than in the past if North Korea's de-dollarization policy is reimplemented. Also, in the case of domestic currency cards, which the North Korean authorities introduced in 2015 as part of a means of financial reform, this paper suggests that it may continue to be difficult for domestic currency cards to normalize official finance under the dollarization hysteresis.
Author: Koji Kubo Publisher: Springer ISBN: 3319577689 Category : Business & Economics Languages : en Pages : 255
Book Description
This book sheds light on the dollarization trends of four transitional economies in Southeast Asia: Cambodia, Lao PDR, Myanmar, and Vietnam. Moving beyond the tendency to focus on the Latin American experience of dollarization and prolonged high inflation, the chapters in this book compare how payment dollarization has been more persistent than other types of dollarization in this region due to network externalities. The book illustrates that dollarization started in the underdeveloped financial system in these countries and that dollarization interacted with financial development, which is in contrast to dollarization in Latin America. This project extends the frontiers of empirical studies on dollarization. It will be of interest to students, researchers and policy makers concerned with dollarization and economics in Southeast Asia.
Author: Nienke Oomes
Author: Nienke Oomes
Author: Bettina M. Peiers
Author: Bettina Peiers
Author: 
Author: Zaid Jamal Albarzinji
Author: Nienke A. Oomes
Author: Paul Reding
Author: Neven T. Valev
Author: Jooyung Lee
Author: Koji Kubo