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货币替代中的价值效应与网络效应
[Value effect and network effect in the process of currency substitution]

Author

Listed:
  • Pang, Xiaobo
  • Huang, Weiting

Abstract

This paper builds an inter-temporal model to study the value and network effects in the process of currency substitution. According to our model, we can define the inaction area and malignant area by taking real interest rate difference and network effect variable as two axes. We also find that the network effect is inconsistent, that is, in the inaction area it will stabilize the using of domestic currency and inhibit currency substitution, however, in the malignant area, it will accelerate currency substitution. This inconsistence result to a ratchet effect in the process of anti-currency substitution.

Suggested Citation

  • Pang, Xiaobo & Huang, Weiting, 2005. "货币替代中的价值效应与网络效应 [Value effect and network effect in the process of currency substitution]," MPRA Paper 11627, University Library of Munich, Germany, revised May 2007.
    • Handle: RePEc:pra:mprapa:11627
    as

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    File URL: https://mpra.ub.uni-muenchen.de/11627/1/MPRA_paper_11627.pdf
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    References listed on IDEAS

    as
    1. 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.
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    3. Mr. Miguel A Savastano, 1996. "Dollarization in Latin America: Recent Evidence and Some Policy Issues," IMF Working Papers 1996/004, International Monetary Fund.
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    6. Dowd, Kevin & Greenaway, David, 1993. "Currency Competition, Network Externalities and Switching Costs: Towards an Alternative View of Optimum Currency Areas," Economic Journal, Royal Economic Society, vol. 103(420), pages 1180-1189, September.
    7. Paul Mizen (ed.), 2003. "Central Banking, Monetary Theory and Practice," Books, Edward Elgar Publishing, number 2329.
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    9. Nobuhiro Kiyotaki & John Moore, 2003. "A Cost of Unified Currency," Edinburgh School of Economics Discussion Paper Series 119, Edinburgh School of Economics, University of Edinburgh.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    currency substitution; network effects; exchange cost; ratchet effect;
    All these keywords.

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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