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Local Currency as a Development Strategy

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  • Jayaraman, Rajshri

    (University of Munich)

  • Mandar Oak

Abstract

The introduction of a local currency may serve as a signal of demand for local goods. Where demand uncertainty deters firms from investing in more productive technologies, such a signal improves the chances that technology choice will be optimal. The introduction of a local currency therefore always improves ex-ante efficiency and may lead to ex-post efficiency, with strictly higher levels of productivity and welfare.

Suggested Citation

  • Jayaraman, Rajshri & Mandar Oak, 2002. "Local Currency as a Development Strategy," Royal Economic Society Annual Conference 2002 106, Royal Economic Society.
  • Handle: RePEc:ecj:ac2002:106
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    6. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins of Technology-Skill Complementarity," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 693-732.
    7. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
    8. Daron Acemoglu & Simon Johnson & James A. Robinson, 2002. "Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1231-1294.
    9. Marvin Goodfriend & John McDermott, 1994. "Early development," Working Paper 94-02, Federal Reserve Bank of Richmond.
    10. Goodfriend, Marvin & McDermott, John, 1995. "Early Development," American Economic Review, American Economic Association, vol. 85(1), pages 116-133, March.
    11. Herschel I. Grossman & Juan Mendoza, 1999. "Scarcity and Conflict," Working Papers 99-24, Brown University, Department of Economics.
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