Topic
Currency
About: Currency is a research topic. Over the lifetime, 26697 publications have been published within this topic receiving 485370 citations. The topic is also known as: monetary unit & unit of money.
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TL;DR: This article analyzed changes in cash demand for 13 advanced economies from 1988 to 2003 by separating cash into three denomination categories to disentangle its store of wealth and payment functions, and showed that demand for small-denomination currency decreases with greater debit card usage and with greater retail market consolidation.
Abstract: While payment card usage has increased dramatically, the stock of outstanding currency has not declined as rapidly. We analyze changes in cash demand for 13 advanced economies from 1988 to 2003 by separating cash into three denomination categories to disentangle its store of wealth and payment functions. Defining denominations commonly dispensed by automated teller machines (ATMs) as the “medium” category, we show that demand for small-denomination currency decreases with greater debit card usage and with greater retail market consolidation. In contrast, the demand for high-denomination notes decreases when interest rates rise but is generally unaffected by changes in debit card usage.
104 citations
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TL;DR: For more than a decade before the great crisis of 1997-98, East Asian countries pegged "softly" to the US dollar as mentioned in this paper, and the post-crisis exchange rate regime in 1999 into 2000 exhibited high frequency pegging to the dollar much like the precrisis regime and there was a "honeymoon" effect where short-term rates of interest in the crisis economies remained unusually low so that hot money flows were temporarily muted.
Abstract: For more than a decade before the great crisis of 1997-98, East Asian countries pegged "softly" to the US dollar In the period of currency chaos from mid 1997 through 1998 with exchange depreciations in eight East Asian countries, massive deflationary pressure in dollar terms which was unleashed in the whole East Asian region Surprisingly, however, the post-crisis exchange rate regime in 1999 into 2000 again exhibits high frequency pegging to the dollar much like the pre-crisis regime In 1999-2000, there was (is) a "honeymoon" effect where short-term rates of interest in the crisis economies remained unusually low so that hot money flows were temporarily muted But this honeymoon will end as the crisis recedes in time Finally, I explore how the informal "rules of the game" under which the East Asian dollar standard operates might be improved to (1) lengthen the term structure of finance-including exchange rate obligations-to make the system more resilient, and (2) tighten bank regulation so as to reduce moral hazard in international capital flows
104 citations
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TL;DR: The authors describe the implications of the current body of research for addressing t... In this review, they describe their own work on the impact of local risk factors on the performance of international stock markets.
104 citations
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TL;DR: The authors examines the pattern of dollarization in Latin America, focusing on the experience of five countries (Argentina, Bolivia, Mexico, Peru and Uruguay) during 1970-1993.
Abstract: This paper examines the pattern of dollarization in Latin America, focusing on the experience of five countries (Argentina, Bolivia, Mexico, Peru and Uruguay) during 1970-1993. It presents evidence on the relative size of dollarization, the allocation of foreign currency deposits, and the behavior of money velocity. The discussion stresses the role of institutional factors, macroeconomic conditions, and the dynamics of money demand In shaping the dollarization process; it also highlights the shortcomings of indicators frequently employed to analyze the phenomenon. The paper provides a brief critical assessment of the empirical literature on dollarization, and identifies areas where further research seems warranted.
104 citations
TL;DR: This article showed that a political leader in a developing country is twice as likely to lose office in the 6 months following a currency crash as otherwise, regardless whether the devaluation takes place in the context of an IMF program.
Abstract: To update a famous old statistic: a political leader in a developing country is twice as likely to lose office in the 6 months following a currency crash as otherwise. This difference, which is highly significant statistically, holds regardless whether the devaluation takes place in the context of an IMF program. Why are devaluations so costly? Many of the currency crises of the last ten years have been associated with output loss. Is this, as alleged, because of excessive reliance on raising the interest rate as a policy response? More likely it is because of contractionary effects of devaluation. There are various possible contractionary effects of devaluation, but it is appropriate that the balance sheet effect receives the most emphasis. Passthrough from exchange rate changes to import prices in developing countries is not the problem: this coefficient fell in the 1990s, as a look at some narrowly defined products shows. Rather, balance sheets are the problem. How can countries mitigate the fall in output resulting from the balance sheet effect in crises? In the shorter term, adjusting promptly after inflows cease is better than procrastinating by shifting to short-term dollar debt, which raises the costliness of the devaluation when it finally comes. In the longer term, greater openness to trade reduces vulnerability to both sudden stops and currency crashes.
104 citations