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The Measurement of Co-Circulation of Currencies and Dollarization in the Republic of Armenia

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  • Hakob Zoryan

Abstract

This paper attempts to estimate the actual (de facto) level of dollarization in Armenia. "Co-circulation" involves the regular use of two or more currencies within an economy. The existence of an unknown amount of foreign currency in circulation makes the outcome of domestic monetary policy uncertain. The volume of foreign currency deposits is easily obtained from the official statistics. However, it is very hard to determine the stock of foreign currency in circulation. The effective money supply may be much larger than the domestic money supply and is subject to behavioral responses which are very different than the movements of the presently measured money supply. The purpose of this paper is to assess the level of dollarization, that is, to evaluate the size and/or proportion of foreign currency in the total money stock of Armenia as a highly dollarized country.

Suggested Citation

  • Hakob Zoryan, 2005. "The Measurement of Co-Circulation of Currencies and Dollarization in the Republic of Armenia," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 2(1), pages 41-65, June.
  • Handle: RePEc:liu:liucej:v:2:y:2005:i:1:p:41-65
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    Citations

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    Cited by:

    1. Reza Y. Siregar & Narith Chan, 2014. "Factors behind Foreign Currency Holding by Household in Cambodia," CAMA Working Papers 2014-58, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    2. Gevorkyan, Aleksandr V., 2015. "The legends of the Caucasus: Economic transformation of Armenia and Georgia," International Business Review, Elsevier, vol. 24(6), pages 1009-1024.

    More about this item

    Keywords

    dollarization; currency substitution; asset substitution; foreign currency; transition economies; Armenia;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • P3 - Economic Systems - - Socialist Institutions and Their Transitions
    • F3 - International Economics - - International Finance
    • P2 - Economic Systems - - Socialist Systems and Transition Economies

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