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Dual-currency economies as multiple-payment systems

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Listed:
  • Ben R. Craig
  • Christopher J. Waller

Abstract

Monetary search models are valuable for studying how a second currency's acceptability arises endogenously in an economy that lacks a stable domestic currency and other more sophisticated payment systems. Search models' basic assumptions (absence of credit, lack of smoothly functioning banking systems, reliance on currency as the sole medium of exchange, and primitive trading environments) are not necessarily consistent with modern financial systems. They do, however, provide good descriptions of transitional and developing economies, particularly in the countries of the former Soviet Union, and may yield helpful policy prescriptions.

Suggested Citation

  • Ben R. Craig & Christopher J. Waller, 2000. "Dual-currency economies as multiple-payment systems," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 2-13.
    • Handle: RePEc:fip:fedcer:y:2000:i:qi:p:2-13
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    References listed on IDEAS

    as
    1. Ben R. Craig & Christopher J. Waller, 1999. "Currency portfolios and nominal exchange rates in a dual currency search economy," Working Papers (Old Series) 9916, Federal Reserve Bank of Cleveland.
    2. Miguel Molico, 2006. "The Distribution Of Money And Prices In Search Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(3), pages 701-722, August.
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