Title of article :
Persistence ofdollarizationafterpricestabilization
Author/Authors :
VeronicaRappoport، نويسنده ,
Issue Information :
روزنامه با شماره پیاپی سال 2008
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
Journal title :
Journal of Monetary Economics
