Currency restrictions, government transaction policies and currency exchange (Q1865163)

This paper constructs a monetary search model, where agents have the choice to hold a good, a domestic currency, or a foreign currency. The paper shows the existence of, and characterizes, the various possible equilibria. The paper then studies the impact of restrictions on the internal use of foreign currency, and of taxes on the domestic currency. These results are applied especially to dollarized economies, such as those of the CIS.