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Dollarization and inflation in a two-country optimization model

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  • Heng-fu Zou

    (Policy Research Department, The World Bank)

Abstract

In a two-country, two-currency model, this paper examines the conditions of dollarization, analyzes the effect of government inflation finance and studies the strategic interdependence of different-currency inflation.

Suggested Citation

  • Heng-fu Zou, 1995. "Dollarization and inflation in a two-country optimization model," CEMA Working Papers 96, China Economics and Management Academy, Central University of Finance and Economics.
    • Handle: RePEc:cuf:wpaper:96
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    References listed on IDEAS

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    1. Pedro Aspe Armella & Rudiger Dornbusch & Maurice Obstfeld, 1983. "Financial Policies and the World Capital Market: The Problem of Latin American Countries," NBER Books, National Bureau of Economic Research, Inc, number arme83-1.
    2. Liviatan, Nissan, 1981. "Monetary Expansion and Real Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1218-1227, December.
    3. Fischer, Stanley, 1982. "Seigniorage and the Case for a National Money," Journal of Political Economy, University of Chicago Press, vol. 90(2), pages 295-313, April.
    4. repec:bla:scandj:v:89:y:1987:i:1:p:91-102 is not listed on IDEAS
    5. Calvo, Guillermo A & Rodriguez, Carlos Alfredo, 1977. "A Model of Exchange Rate Determination under Currency Substitution and Rational Expectations," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 617-625, June.
    6. Stanley Fischer, 1983. "Seigniorage and Fixed Exchange Rates: An Optimal Inflation Tax Analysis," NBER Chapters, in: Financial Policies and the World Capital Market: The Problem of Latin American Countries, pages 59-70, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Chan Wang & Heng-fu Zou, 2013. "On the efficiency of monetary and fiscal policy in open economies," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 179-206, May.
    2. Chan Wang & Heng-fu Zou, 2013. "Optimal monetary and tariff policy in open economies," CEMA Working Papers 587, China Economics and Management Academy, Central University of Finance and Economics.
    3. Chan Wang & Heng-fu Zou, 2013. "Optimal monetary policy in open economies: the role of reference currency in vertical production and trade," CEMA Working Papers 586, China Economics and Management Academy, Central University of Finance and Economics.

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    JEL classification:

    • F30 - International Economics - - International Finance - - - General

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