Browsing by Subject "Currency substitution"

Now showing 1 - 3 of 3

Open Access
Currency substitution: a numerical dynamic programming approach
(1998) Volkan, Engin
This thesis conducts a theoretical study on currency substitution in an infinitelylived small open financially repressed economy which is subject to stochastic inflation shocks. For this purpose, a dynamic programming model is constructed under the assumption that purchasing power parity holds. The solution of the model through value function iteration shows that under high inflation, and financial repression, the inhibitants of an economy will demand foreign currency to the extend that it provides a better protection of their wealth against inflation.
Open Access
Currency substitution: new evidence from emerging economies
(Elsevier BV, 2003) Selçuk, F.
This paper provides new empirical evidence for currency substitution in different emerging market economies. Estimation results from a money-in-the-utility-function framework indicate that foreign currencies are strong substitutes for domestic currency in producing liquidity services. © 2002 Elsevier Science B.V. All rights reserved.
Open Access
Three essays on inflation and monetary policy in Turkey
(2003) Us, Vuslat
This dissertation analyzes three studies on inflation dynamics and monetary policy alternatives in Turkey. In the first article, inflation inertia is analyzed. To this aim, expectations are assumed to be formed optimal univariate in a staggared contracts model setting,. An alternative assumption, which then would be subject to Lucas critique, is that expectations are naive. Consequently, the analysis favors the first alternative to the latter one in explaining high and persistent inflation. In the second study, the degree of currency substitution is analyzed by using various definitions. More specifically, ratchet effect in currency substitution is studied by Autoregressive distributed lag (ADL) procedure. The statistical evidence suggests that even though currency substitution has been persistent at an increasing degree, the economy at large has not been irreversibly dollarized yet. The final study of this dissertation discusses monetary transmission mechanism in a small structural model setting. In this framework, using various simulations the implementation of a standard Taylor Rule is analyzed. The alternative proposal is the use a monetary conditions index as a policy rule. The results show that the second alternative is preferable since the economy is then exposed to lessened volatility.