Rachet Effects in Currency Substitution: An Application to the Kyrgyz Republic
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Summary:
Currency substitution is now a common issue in the design of monetary policy in most transition economies. This paper analyzes the persistence of this phenomenon in the Kyrgyz Republic by including a ratchet variable in the model specification. The main conclusion of the paper is that, while some degree of persistence is present in the allocation of bank deposit, currency substitution in the economy at large has not yet reached a point where reversing it would be difficult. In this regard, there is still room for monetary policy to influence currency allocation in the private sector.
Series:
Working Paper No. 1999/102
Subject:
Commercial banks Currencies Demand for money Depreciation Dollarization Financial institutions Inflation Monetary policy Money National accounts Prices
English
Publication Date:
July 1, 1999
ISBN/ISSN:
9781451852592/1018-5941
Stock No:
WPIEA1021999
Pages:
23
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