Comprehensive Economics Analysis for Currency Substitution in Developing and Emerging Market Countries

2017 Fiscal Year Final Research Report

• Project/Area Number: 15K03536
• Research Category: Grant-in-Aid for Scientific Research (C)
• Allocation Type: Multi-year Fund
• Section: 一般
• Research Field: Money/ Finance
• Research Institution: Dokkyo University (2016-2017); Fukushima University (2015)
• Principal Investigator: Kumamoto Hisao 獨協大学, 経済学部, 准教授 (30375349)
• Co-Investigator(Renkei-kenkyūsha): KUMAMOTO Masao 東京経済大学, 経済学部, 教授 (30328257)
• Project Period (FY): 2015-04-01 – 2018-03-31
• Keywords: 新興市場国 / 通貨代替 / DSGEモデル / ベイズ推定

Outline of Final Research Achievements

We empirically investigate how currency substitution transmits domestic and foreign monetary policy shocks to domestic countries and evaluate how the central bank respond to real exchange rate movements in three inflation-targeting Latin American countries and Asian countries under currency substitution. Our empirical results are as follows: (1) The domestic monetary policy has a significant impact on the domestic economy, but the foreign monetary policy does not affect the domestic economy to any great extent except Mexico. (2) The domestic monetary policy impact in the domestic economy is mainly through the real interest rate channel, on the other hand, the foreign monetary policy is through the marginal rate of substitution channel. (3) The central banks in sample countries actively respond to the real exchange rate movements to diminish the unpleasant results of real exchange rate volatility.

Free Research Field

国際金融論