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Rojas-Suárez, Liliana.

Currency Substitution and Inflation in Peru Liliana Rojas-Suárez. [electronic resource] / Liliana Rojas-Suárez. - Washington, D.C. : International Monetary Fund, 1992. - 1 online resource (46 p.) - IMF Working Papers; Working Paper ; No. 92/33 . - IMF Working Papers; Working Paper ; No. 92/33 .

This paper shows that there is a long-run relationship between the expected rate of depreciation in the black-market-exchange rate and the ratio of domestic to foreign money in Peru; that is, the hypothesis of currency substitution can explain the behavior of real holdings of money in Peru. The paper also shows that, while the importance of currency substitution as a transmission mechanism through which domestic policies affected the dynamics of inflation was relatively small during a period of high but relatively stable inflation (January 1978-85), it became an important factor in the inflation process during the recent hyperinflation episode.

ISBN: 1451979207 : 15.00 USD

ISSN: 1018-5941

Standard No.: 10.5089/9781451979206.001 doi

Subjects--Topical Terms:
Exchange Rate
Inflation Rate
Monetary Policy

Subjects--Geographic Terms:
Peru