Dollarization and inflation in a two-country optimization model
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.
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- 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.