Dollarization and currency exchange

• 成果类型: Article
• 署名作者: Craig, B; Waller, CJ
• 署名单位: University of Notre Dame; Federal Reserve System - USA; Federal Reserve Bank - Cleveland
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2003.10.002
• 发表日期: 2004
• 页码: 671-689
• 关键词: money; dollarization; search

摘要

We use a dual currency money search model to study dollarization. Agents hold portfolios consisting of two currencies, one of which is risky. We use numerical methods to solve for the steady-state distributions of currency portfolios, transaction patterns, and value functions. As risk increases, agents increasingly use the safe currency as a medium of exchange-dollarization occurs. Furthermore, the safe currency trades for multiple units of the risky currency. This type of currency exchange, and the corresponding nominal exchange rate, are often observed in black market or unofficial Currency exchange markets in developing countries. Due to decentralized trading, a distribution of exchange rates arises, whose mean and variance change in predictable ways when Currency risk increases. (C) 2003 Elsevier B.V. All rights reserved.