The dynamics of inflation and currency substitution in a small open economy

Detalhes bibliográficos
Autor(a) principal: Freitas, Miguel Lebre de
Data de Publicação: 2004
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/1822/1474
Resumo: This paper analyzes the relationship between money and inflation in a small open economy, where domestic and foreign currencies are perfect substitutes as means of payment. It is shown that, if the path of domestic money supply is such that individuals find it optimal to change the currency in which transactions are settled, there will be an adjustment period during which domestic inflation adjusts to equal the foreign inflation rate. The model captures the stylized fact that temporary increases in the inflation rate may have permanent effects in the use of foreign currency, even without the introduction of dollarization costs.
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spelling The dynamics of inflation and currency substitution in a small open economyCurrency substitutionDollarizationMoney-demandHysteresisThis paper analyzes the relationship between money and inflation in a small open economy, where domestic and foreign currencies are perfect substitutes as means of payment. It is shown that, if the path of domestic money supply is such that individuals find it optimal to change the currency in which transactions are settled, there will be an adjustment period during which domestic inflation adjusts to equal the foreign inflation rate. The model captures the stylized fact that temporary increases in the inflation rate may have permanent effects in the use of foreign currency, even without the introduction of dollarization costs.ElsevierUniversidade do MinhoFreitas, Miguel Lebre de2004-022004-02-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/1822/1474eng"Journal of International Money and Finance". ISSN 0261-5606. 23:1 (2004) 133-142.0261-5606info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2024-05-11T05:03:58Zoai:repositorium.sdum.uminho.pt:1822/1474Portal AgregadorONGhttps://www.rcaap.pt/oai/openairemluisa.alvim@gmail.comopendoar:71602024-05-11T05:03:58Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse
dc.title.none.fl_str_mv The dynamics of inflation and currency substitution in a small open economy
title The dynamics of inflation and currency substitution in a small open economy
spellingShingle The dynamics of inflation and currency substitution in a small open economy
Freitas, Miguel Lebre de
Currency substitution
Dollarization
Money-demand
Hysteresis
title_short The dynamics of inflation and currency substitution in a small open economy
title_full The dynamics of inflation and currency substitution in a small open economy
title_fullStr The dynamics of inflation and currency substitution in a small open economy
title_full_unstemmed The dynamics of inflation and currency substitution in a small open economy
title_sort The dynamics of inflation and currency substitution in a small open economy
author Freitas, Miguel Lebre de
author_facet Freitas, Miguel Lebre de
author_role author
dc.contributor.none.fl_str_mv Universidade do Minho
dc.contributor.author.fl_str_mv Freitas, Miguel Lebre de
dc.subject.por.fl_str_mv Currency substitution
Dollarization
Money-demand
Hysteresis
topic Currency substitution
Dollarization
Money-demand
Hysteresis
description This paper analyzes the relationship between money and inflation in a small open economy, where domestic and foreign currencies are perfect substitutes as means of payment. It is shown that, if the path of domestic money supply is such that individuals find it optimal to change the currency in which transactions are settled, there will be an adjustment period during which domestic inflation adjusts to equal the foreign inflation rate. The model captures the stylized fact that temporary increases in the inflation rate may have permanent effects in the use of foreign currency, even without the introduction of dollarization costs.
publishDate 2004
dc.date.none.fl_str_mv 2004-02
2004-02-01T00:00:00Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://hdl.handle.net/1822/1474
url http://hdl.handle.net/1822/1474
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv "Journal of International Money and Finance". ISSN 0261-5606. 23:1 (2004) 133-142.
0261-5606
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Elsevier
publisher.none.fl_str_mv Elsevier
dc.source.none.fl_str_mv reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
instacron:RCAAP
instname_str Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
instacron_str RCAAP
institution RCAAP
reponame_str Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
collection Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
repository.name.fl_str_mv Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
repository.mail.fl_str_mv mluisa.alvim@gmail.com
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