Currency Substitution and Financial Repression
AbstractIn this paper, we use a general equilibrium overlapping generations monetary endogenous growth model of a small open economy, to analyze whether financial repression, measured via the "high" mandatory reserve-deposit requirements of financial intermediaries, is an optimal response of a consolidated government following an increase in the degree of currency substitution. We find that higher currency substitution can yield higher reserve requirements, but, the result depends crucially on how the consumer weighs money in the utility function relative to domestic and foreign consumptions, and also the size of the government.
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Bibliographic InfoPaper provided by University of Pretoria, Department of Economics in its series Working Papers with number 200806.
Length: 20 pages
Date of creation: Apr 2008
Date of revision:
Currency Substitution; Endogenous Growth Models; Financial Repression; Small Open Economy; Public Finance;
Other versions of this item:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-05-17 (All new papers)
- NEP-CBA-2008-05-17 (Central Banking)
- NEP-DGE-2008-05-17 (Dynamic General Equilibrium)
- NEP-MAC-2008-05-17 (Macroeconomics)
- NEP-MON-2008-05-17 (Monetary Economics)
- NEP-OPM-2008-05-17 (Open Economy Macroeconomic)
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- Rangan Gupta & Cobus Vermeulen, 2010.
"Private and Public Health Expenditures in an Endogenous Growth Model with Inflation Targeting,"
201001, University of Pretoria, Department of Economics.
- Rangan Gupta & Cobus Vermeulen, 2010. "Private and Public Health Expenditures in an Endogenous Growth Model with Inflation Targeting," Annals of Economics and Finance, Society for AEF, vol. 11(1), pages 139-153, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rangan Gupta).
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