Search results for "Legal tender"
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Bilateral De-Jure Exchange Rate Regimes and Foreign Direct Investment: A Gravity Analysis
2021
Abstract This paper introduces a novel dataset on bilateral de-jure exchange rate regimes. The new dataset accounts for the fact that officially pegging to one currency is uninformative about the exchange rate regime prevailing vis-a-vis other currencies, and it allows characterizing bilateral exchange rate regimes based on countries’ ex-ante announcements rather than ex-post observations. We use this data to estimate the effect of expected exchange rate volatility on foreign direct investment (FDI). Starting from a simple model that suggests that announced exchange rate stability enhances bilateral FDI flows, we provide empirical evidence that lends support to this claim: countries that ar…
We Had to Feed the People: The Italian Lira and the Political Economy of Currency in British Eritrea, 1941–1950
2021
Following the occupation of Eritrea in 1941, British authorities in London promoted a currency policy aimed at replacing the Italian lira with a sterling-based currency basket. In May 1942, they opted for the enforcement of the East African shilling as the new legal tender. The lire, however, did not disappear overnight. Their circulation was tolerated—and, in some cases, even encouraged—by British authorities in Asmara, which exploited the small deal of autonomy they enjoyed from London to adapt the new monetary system to the needs of local governance. The case study is a useful lens to analyse the multiplicity of interests that shaped the political economy of currency of the United Kingdo…