{
  "title": "Currency Substitution and Inflation in Peru",
  "publication": "IMF Working Papers, May 1, 1992",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/currency-substitution-and-inflation-in-peru-781",
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  "summary": "This paper shows that there is a long-run relationship between the expected rate of depreciation in the black-market-exchange rate and the ratio of domestic to foreign money in Peru; that is, the hypothesis of currency substitution can explain the behavior of real holdings of money in Peru.",
  "sections": [
    {
      "heading": "Main findings",
      "content": "- There is a long-run relationship between the expected rate of depreciation in the black-market-exchange rate and the ratio of domestic to foreign money in Peru; that is, the hypothesis of currency substitution can explain the behavior of real holdings of money in Peru.\n- The paper shows that the importance of currency substitution as a transmission mechanism through which domestic policies affected the dynamics of inflation was relatively small during a period of high but relatively stable inflation (January 1978-85).\n- The paper shows that currency substitution became an important factor in the inflation process during the recent hyperinflation episode."
    },
    {
      "heading": "Scope and focus",
      "content": "- Empirical analysis linking expected rate of depreciation in the black-market-exchange rate to the ratio of domestic to foreign money.\n- Emphasis on currency substitution (dollarization) as an explanatory mechanism for real money holdings and as a transmission channel for domestic policy into inflation dynamics."
    },
    {
      "heading": "Contextual conclusions",
      "content": "- During January 1978-85: currency substitution played a relatively small role in transmitting domestic policies into inflation dynamics despite high but relatively stable inflation.\n- During the recent hyperinflation episode: currency substitution emerged as an important factor shaping the inflation process."
    },
    {
      "heading": "Subjects and keywords (as listed)",
      "content": "- Subjects: Bank deposits, Dollarization, Exchange rates, Financial services, Foreign exchange, Government debt management, Inflation, Monetary policy, Prices, Public financial management (PFM)\n- Keywords: Bank deposits, currency substitution, Dollarization, domestic money, Exchange rates, foreign currency, foreign money, Government debt management, Inflation, inflation equation, inflation rate, money holder, transmission mechanism, U.S. dollar, WP\n\nLiliana Rojas-Suárez; May 1, 1992. \"Currency Substitution and Inflation in Peru.\"\n\n---\n\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/currency-substitution-and-inflation-in-peru-781"
    }
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    "Authors: Liliana Rojas-Suárez",
    "Published: May 1, 1992",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451979206.001",
    "There is a long-run relationship between the expected rate of depreciation in the black-market-exchange rate and the ratio of domestic to foreign money in Peru; that is, the hypothesis of currency substitution can explain the behavior of real holdings of money in Peru.",
    "The paper shows that the importance of currency substitution as a transmission mechanism through which domestic policies affected the dynamics of inflation was relatively small during a period of high but relatively stable inflation (January 1978-85).",
    "The paper shows that currency substitution became an important factor in the inflation process during the recent hyperinflation episode.",
    "Empirical analysis linking expected rate of depreciation in the black-market-exchange rate to the ratio of domestic to foreign money.",
    "Emphasis on currency substitution (dollarization) as an explanatory mechanism for real money holdings and as a transmission channel for domestic policy into inflation dynamics.",
    "During January 1978-85: currency substitution played a relatively small role in transmitting domestic policies into inflation dynamics despite high but relatively stable inflation.",
    "During the recent hyperinflation episode: currency substitution emerged as an important factor shaping the inflation process.",
    "Subjects: Bank deposits, Dollarization, Exchange rates, Financial services, Foreign exchange, Government debt management, Inflation, Monetary policy, Prices, Public financial management (PFM)",
    "Keywords: Bank deposits, currency substitution, Dollarization, domestic money, Exchange rates, foreign currency, foreign money, Government debt management, Inflation, inflation equation, inflation rate, money holder, transmission mechanism, U.S. dollar, WP"
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