Cover IMF Working Papers
Buy Book in Print
Currency Substitution in Developing Countries: An Introduction
Author:
Mr. Guillermo Calvo null

Search for other papers by Mr. Guillermo Calvo in
Current site
Google Scholar Close
and
Mr. Carlos A. Végh Gramont null

Search for other papers by Mr. Carlos A. Végh Gramont in
Current site
Google Scholar Close
Series:
IMF Working Papers
Volume/Issue:
Volume 1992: Issue 040
Language:
English
Publication Date:
01 May 1992
DOI:
https://doi.org/10.5089/9781451845884.001
ISBN:
9781451845884
ISSN:
1018-5941
Pages:
32
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
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Download PDF (2.3 MB) Download Epub
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.
  • Collapse
  • Expand
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund