User Cost of Foreign Monetary Assets Under Dollarization

We use a Capital Asset Price Model (CAPM) model to derive the formula of user cost for foreign monetary asset whose rates of return are subject to foreign exchange risk premia. Our formula shows that only domestic non-monetary asset can be used as the benchmark asset. In fact, under dollarization the local currency’ assets offer a higher risk premium and return over the dollar denominated one because the latter is preferred over the first for hedging motives

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Year of publication:	[2022]
Authors:	Yemba, Boniface
Publisher:	[S.l.] : SSRN
Subject:	Währungssubstitution \| Currency substitution \| Theorie \| Theory \| Geldpolitik \| Monetary policy \| US-Dollar \| US dollar

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Extent:	1 Online-Ressource (7 p)
Type of publication:	Book / Working Paper
Language:	English
Notes:	In: EL53411
Other identifiers:	10.2139/ssrn.3986218 [DOI]
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10013310867