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Dollarization in North Korea: Evidence from a Survey of North Korean Refugees

Author

Listed:
  • Mun , Sung Min

    (The Bank of Korea)

  • Jung , Seung Ho

    (The Bank of Korea)

Abstract

This study measures the degree of dollarization in North Korea using results from a survey of 231 North Korean refugees. Specifically, we compare foreign currency use of households as both store-of-value substitutes (i.e., asset substitution) and transaction substitutes (i.e., currency substitution) before and after the confiscatory currency reform of 2009. The degree of dollarization has advanced since the currency reform in terms of both asset and currency substitutions. Survey results also indicate that the Chinese yuan is frequently used in the Sino-North Korean border area, whereas the US dollar is predominantly used in non-border areas. Furthermore, foreign currency increasingly serves as a medium of exchange not only for large transactions but also for smaller transactions, such as food purchases.

Suggested Citation

  • Mun , Sung Min & Jung , Seung Ho, 2017. "Dollarization in North Korea: Evidence from a Survey of North Korean Refugees," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 21(1), pages 81-100, March.
    • Handle: RePEc:ris:eaerev:0324
    DOI: 10.11644/KIEP.EAER.2017.21.1.324
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    Citations

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    Cited by:

    1. Lee, Jongkyu & Lee, Suk, 2020. "Dollarization of the North Korean Economy: Causes and Effects," Dialogue on the North Korea Economy March 2020, Korea Development Institute (KDI).
    2. Choi, Ji Young & Lee, Suk, 2021. "Price and foreign exchange rate in North Korea: Observations, trends, and analysis," Dialogue on the North Korea Economy October 2021, Korea Development Institute (KDI).

    More about this item

    Keywords

    North Korea; Dollarization; Confiscatory Currency Reform; Asset Substitution; Currency Substitution;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General
    • P30 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - General

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