Currency Substitution: Theory and Evidence from Latin America

1. Introduction.- References.- 2. A General Equilibrium Theory of Exchange Rates and Managed Floating.- 1. Multiple Stochastic Exchange Rate Equilibria.- 2. Price Uncertainty and Flexible Exchange Rates.- 3. A Welfare Analysis.- References.- 3. Empirical Implementation of the Instability Hypothesis.- 1. Instability and Theoretical Models.- 2. Modelling Considerations.- 3. The Model.- 4. Equilibrium with Government Intervention.- 5. Dominican Currency Crises.- 6. Concluding Remarks.- References.- 4. Currency Substitution and Small Open Economies: The Case of the Dominican Republic.- 1. Stylized Institutional Features of the Dominican Republic Parallel Market.- 2. The Empirical Model.- 3. Empirical Analysis.- 4. Summary and Conclusions.- Notes.- References.- 5. Dominant Currencies and Monetarism in Argentina.- 1. Introduction.- 2. Basic Dominant Currency Modelling Considerations.- 3. A Summary of Argentina’s Exchange Rate Systems 1956–82.- 4. The Case of Argentina.- 5. Evidence of One Way Currency Substitution.- 6. Money, Exchange Rates, and Prices.- References.- 6. Venezuela and Ecuador—Currency Substitution in Oil Economies.- 1. Stability and Homogeneity.- 2. Frequency Analysis of Money and Prices.- 3. Concluding Remarks.- References.- 7. Conclusion.