Title of article
Persistence ofdollarizationafterpricestabilization
Author/Authors
VeronicaRappoport، نويسنده ,
Issue Information
روزنامه با شماره پیاپی سال 2008
Pages
11
From page
979
To page
989
Abstract
Credit contractsindevelopingcountriesareoftendenominatedinforeigncurrencies,
even aftermanyoftheseeconomiessucceededincontrollinginflation.Thispaper
proposes anewinterpretationofthisapparentpuzzlebasedonthedemandfor
insurance againstrealshocks:thefactthatdevaluationsoccurmorefrequentlyin
adverse statesoftheworldprovidesamotiveforholdingdollarassets.Thisapproach
impliesacomplementaritybetweentheoptimalmonetarypolicyandthecurrency
denominationofcontracts.Whenalargeproportionofliabilitiesisdenominatedina
foreign currency,theoptimalexchangeratevolatilityislow,whichreinforcesthe
demandfordollarassets.
Keywords
DollarizationNonexclusivecontractsMultiple equilibriaUnderinsurance
Journal title
Journal of Monetary Economics
Serial Year
2008
Journal title
Journal of Monetary Economics
Record number
846346
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