This paper examines how unhedged currency exposure of firms varies with changes in currency flexibility. A sequence of four time-periods with alternating high and low currency volatility in India provides a natural experiment in which changes in currency exposure of a panel of firms is measured, and the moral hazard versus incomplete markets hypotheses tested. We find that firms carried higher ...

Since the breakdown of the Bretton Woods System, exchange arrangements of countries have become flexible. Several attempts have been made to determine whether the theories of optimum currency areas adequately explain the choice of an exchange rate system. In this paper, the optimum currency area is retested. Using cross-section data, a regression analysis of the choice of an exchange rate syste...

In this paper, I attempt to address some of these issues. I examine the behaviour of countries that are or have been members of international currency unions. More precisely, I ask whether existing currency unions replicate the desirable features of optimal currency areas as set out by Mundell (1961). Specifically, I ask whether the countries and political units that constitute currency unions ...

Security: Forging paper currency is difficult. Unfortunately, electronic currency is just data and is easily copied. Copying or double spending of electronic currency should be prevented or detected. Ideally the illegal creation, copying, and reuse of electronic cash should be unconditionally or computationally impossible. Some systems rely instead on post-fact detection and punishment of doubl...

In the past decade changes in oil prices have played a significant role in shaping inflation dynamics in the US and in the euro area, largely through their direct effect on liquid fuels prices. This has revived the controversy on whether fuels consumer prices respond more promptly to positive than to negative oil price shocks. This paper provides fresh evidence on the link between liquid fuels ...

The last two decades have been marked by far-reaching changes in financial markets. The combined effects of financial deregulation and innovation against the backdrop of globalisation and the development of new information and communication technologies may have contributed to strengthening the role of financial factors in the economic cycle and, hence, to an alteration of the channels used for...

The paper uses a dual-currency search theoretic approach to demonstrate that it is possible to induce the acceptance of a local currency in a dollarized economy. In the model, we assume that a foreign currency is in full circulation and the government policy tool is the convertibility of the local currency to the foreign currency. We show that the economy can achieve equilibria where two monies...

While invoicing currency has been extensively studied in open-economy macroeconomics, Dotsey and Duarte (2011) suggest that the currency denomination of exports does not matter because standard invoicing currency regimes such as producer currency pricing (PCP) and local currency pricing (LCP) generate similar aggregate responses. However, this paper demonstrates the importance of invoicing curr...

In this paper we estimate a simple New-Keynesian DSGE model with German data for the sample period 1970:q1 to 1998:q4. Contrary to a number of recent similar papers estimated with US and euro-area data, we find that real money balances contribute significantly to the determination of inflation and of the dynamics of output. We estimate our model using a maximum likelihood technique under a full...

A paper currency recognition system has a wide range of applications such as self receiver machines for automated teller machines and automatic good-selling machines. In this paper a new paper currency recognition system based on Fourier-Mellin transform, Markovian characteristics and Support Vector Machine (SVM) is presented. In the first, a pre-processing algorithm by Fourier-Mellin transform...