Comparing the Currency Economy of Iran and Argentina

This paper compares the dollarization of Iran and Argentina's economy through estimating the dollarsin circulation and the degree of currency substitution. Currency substitution is important because itreduces a part of central bank supervision over the money in circulation. This comparison showed thatthe dollarization of Iran and Argentina's economy is lateral, which means that the domestic currency isreplaced by the foreign currency but there is no demand for the domestic currency of Iran and Argentinain abroad (Iran Rial and Argentina pesos). In this study the Kamin& Ericsson method is used tocompare the degree of currency substitution in Iran and Argentina economy.

Keywords:

Currency substitution , dollarization , currency demand , inflation , the economy of Iran andArgentina