Currency substitution in Eastern Europe

B. van Aarle, N. Budina

Research output: Working paperDiscussion paperOther research output

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Abstract

Monetary instability during the transition process from a command economy to a market economy has induced a considerable increase in currency substitution in Eastern Europe. Currency substitution itself affects monetary stability since it reduces the stability of velocity. This paper investigates currency substitution in Eastern Europe. The consequences for the conduct of monetary policies are stressed as currency substitution of a significant degree has a large impact on monetary equilibrium and public finance. Currency substitution affects the shape of the seignorage Laffer-curve, since it makes its tax base, real money demand, sensitive to exchange rate expectations. With the use of the available data the sensitivity of money demand to currency substitution in the Eastern European countries is assessed.
Original languageEnglish
PublisherUnknown Publisher
Volume1995-2
Publication statusPublished - 1995

Publication series

NameCentER Discussion Paper
Volume1995-2

Fingerprint

Currency substitution
Eastern Europe
Money demand
Tax base
Command economy
Monetary equilibrium
Monetary stability
Exchange rate expectations
Transition process
Public finance
Monetary policy
Market economy
European countries
Seignorage
Laffer curve

Keywords

  • Currency Substitution
  • monetary economics

Cite this

van Aarle, B., & Budina, N. (1995). Currency substitution in Eastern Europe. (CentER Discussion Paper; Vol. 1995-2). Unknown Publisher.
van Aarle, B. ; Budina, N. / Currency substitution in Eastern Europe. Unknown Publisher, 1995. (CentER Discussion Paper).
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van Aarle, B & Budina, N 1995 'Currency substitution in Eastern Europe' CentER Discussion Paper, vol. 1995-2, Unknown Publisher.

Currency substitution in Eastern Europe. / van Aarle, B.; Budina, N.

Unknown Publisher, 1995. (CentER Discussion Paper; Vol. 1995-2).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Currency substitution in Eastern Europe

AU - van Aarle, B.

AU - Budina, N.

N1 - Pagination: 26, [3]

PY - 1995

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N2 - Monetary instability during the transition process from a command economy to a market economy has induced a considerable increase in currency substitution in Eastern Europe. Currency substitution itself affects monetary stability since it reduces the stability of velocity. This paper investigates currency substitution in Eastern Europe. The consequences for the conduct of monetary policies are stressed as currency substitution of a significant degree has a large impact on monetary equilibrium and public finance. Currency substitution affects the shape of the seignorage Laffer-curve, since it makes its tax base, real money demand, sensitive to exchange rate expectations. With the use of the available data the sensitivity of money demand to currency substitution in the Eastern European countries is assessed.

AB - Monetary instability during the transition process from a command economy to a market economy has induced a considerable increase in currency substitution in Eastern Europe. Currency substitution itself affects monetary stability since it reduces the stability of velocity. This paper investigates currency substitution in Eastern Europe. The consequences for the conduct of monetary policies are stressed as currency substitution of a significant degree has a large impact on monetary equilibrium and public finance. Currency substitution affects the shape of the seignorage Laffer-curve, since it makes its tax base, real money demand, sensitive to exchange rate expectations. With the use of the available data the sensitivity of money demand to currency substitution in the Eastern European countries is assessed.

KW - Currency Substitution

KW - monetary economics

M3 - Discussion paper

VL - 1995-2

T3 - CentER Discussion Paper

BT - Currency substitution in Eastern Europe

PB - Unknown Publisher

ER -

van Aarle B, Budina N. Currency substitution in Eastern Europe. Unknown Publisher. 1995. (CentER Discussion Paper).