Measurement of Co-Circulation of Currencies

42 Pages Posted: 15 Feb 2006

See all articles by Russell Krueger

Russell Krueger

International Monetary Fund (IMF)

Jiming Ha

International Monetary Fund (IMF)

Date Written: March 1995

Abstract

"Co-circulation" involves the regular use of two or more currencies within an economy. This paper examines methodologies to measure the extent to which foreign currencies are circulated within an economy. Ample anecdotal evidence exists that the U.S. dollar, DM, and other currencies are widely used outside their home countries, as general mediums of exchange, as speculative instruments, or as means of saving. Co-circulation is rarely estimated, which can result in serious errors in statistical estimates of international capital flows and monetary aggregates. We examine a variety of measurement techniques that might be used in various situations. However, estimation remains difficult or impossible in some settings. Limited evidence available suggests that co-circulation is widespread and large scale in some countries. In the final section, we discuss some policy implications of co-circulation regarding seigniorage, inflation control, and the partial integration of monetary systems that accompanies co-circulation. An appendix by Roman Zytek discusses possible sampling biases in measuring co-circulation due to segmentation in markets.

JEL Classification: C42, C82, E51, F31

Suggested Citation

Krueger, Russell and Ha, Jiming, Measurement of Co-Circulation of Currencies (March 1995). Available at SSRN: https://ssrn.com/abstract=883183 or http://dx.doi.org/10.2139/ssrn.883183

Russell Krueger (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Jiming Ha

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
134
Abstract Views
985
rank
271,819
PlumX Metrics