Currency substitution, the use of foreign money to finance transactions between domestic residents, is a common feature of emerging market economies.Currency substitution reduces the stability of money demand functions in ways that can seriously undermine central bank credibility and its efforts...

Currency substitution, the use of foreign money to finance transactions between domestic residents, is a common feature of emerging market economies. Currency substitution re-duces the stability of money demand functions in ways that can seriously undermine cen-tral bank credibility and its...

The paper proposes a new indicator of expected real effects of a policy aimed at controlling inflation.The indicator, called real effect of inflation targeting (REIT), involves the comparison of expected and output-neutral inflation.It is shown that it can be derived from a simple...