Network Externalities and Dollarization Hysteresis: The Case of Russia

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Price:  $15.00

Author/Editor: Nienke Oomes
Release Date: © May, 2003
ISBN : 978-1-45185-193-9
Stock #: WPIEA0962003
English
Stock Status: Available

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Description

Dollarization in Russia increased rapidly during the early 1990s, but failed to come down in the second half of the 1990s in spite of exchange rate stabilization. To explain this "dollarization hysteresis," this paper develops a model in which network externalities in the demand for currency can generate multiple stable steady states for the dollarization ratio. The model is estimated using a new source of data on dollar currency holdings in Russia. On the basis of these estimates, which confirm the existence of network externalities, the paper discusses several policies that could result in a permanent decrease in dollarization.

Taxonomy

Demand for money , Economic policy , Foreign exchange , Monetary policy




More publications in this series: Working Papers


More publications by: Nienke Oomes