{
  "title": "Rachet Effects in Currency Substitution: An Application to the Kyrgyz Republic",
  "publication": "IMF Working Papers, July 1, 1999",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/rachet-effects-in-currency-substitution-an-application-to-the-kyrgyz-republic-3169",
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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.",
  "sections": [
    {
      "heading": "Research question and methodology",
      "content": "- Objective: Analyze the persistence of currency substitution in the Kyrgyz Republic by including a ratchet variable in the model specification.\n- Approach: Empirical modeling with an explicit ratchet variable to capture persistence in currency allocation decisions (as described in the summary)."
    },
    {
      "heading": "Key findings",
      "content": "- Some degree of persistence is present in the allocation of bank deposits.\n- Currency substitution in the economy at large has not yet reached a point where reversing it would be difficult.\n- There remains room for monetary policy to influence currency allocation in the private sector."
    },
    {
      "heading": "Policy implications",
      "content": "- Monetary authorities retain levers to affect currency allocation despite observed persistence in deposit behavior.\n- The presence of a ratchet effect in bank deposit allocation indicates the need to monitor persistence dynamics, but does not imply irreversible dollarization at the aggregate economy level."
    },
    {
      "heading": "Subject coverage and keywords (as listed)",
      "content": "- Subjects: Commercial banks, Currencies, Demand for money, Depreciation, Dollarization, Financial institutions, Inflation, Monetary policy, Money, National accounts, Prices\n- Keywords: Commercial banks, CS definition, CS process, CS ratio, Currencies, currency substitution, Depreciation, depreciation rate, Dollarization, Inflation, management technique, monetary policy, ratchet effect, ratchet effects, ratio, U.S. dollar, WP\n\n---\n\n Content in this bundle\n\n- Ratchet Effects in Currency Substitution: An Application to the Kyrgyz Republic - WP/99/102\n  - Ratchet Effects in Currency Substitution: An Application to the Kyrgyz Republic - WP/99/102 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Ratchet Effects in Currency Substitution: An Application to the Kyrgyz Republic - WP/99/102 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/rachet-effects-in-currency-substitution-an-application-to-the-kyrgyz-republic-3169"
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    "Authors: Joannes Mongardini, Johannes Mueller",
    "Published: July 1, 1999",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451852592.001",
    "Objective: Analyze the persistence of currency substitution in the Kyrgyz Republic by including a ratchet variable in the model specification.",
    "Approach: Empirical modeling with an explicit ratchet variable to capture persistence in currency allocation decisions (as described in the summary).",
    "Some degree of persistence is present in the allocation of bank deposits.",
    "Currency substitution in the economy at large has not yet reached a point where reversing it would be difficult.",
    "There remains room for monetary policy to influence currency allocation in the private sector.",
    "Monetary authorities retain levers to affect currency allocation despite observed persistence in deposit behavior.",
    "The presence of a ratchet effect in bank deposit allocation indicates the need to monitor persistence dynamics, but does not imply irreversible dollarization at the aggregate economy level.",
    "Subjects: Commercial banks, Currencies, Demand for money, Depreciation, Dollarization, Financial institutions, Inflation, Monetary policy, Money, National accounts, Prices",
    "Keywords: Commercial banks, CS definition, CS process, CS ratio, Currencies, currency substitution, Depreciation, depreciation rate, Dollarization, Inflation, management technique, monetary policy, ratchet effect, ratchet effects, ratio, U.S. dollar, WP",
    "**Ratchet Effects in Currency Substitution: An Application to the Kyrgyz Republic - WP/99/102**"
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