Uhlig, Harald. <br/><br/>
Parallel Digital Currencies and Sticky Prices / 
Harald Uhlig, Taojun Xie. 
 - Cambridge, Mass.  National Bureau of Economic Research  2020. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w28300 .
 - Working Paper Series (National Bureau of Economic Research)  no. w28300. .
<br/><br/> December 2020. 
<br/><br/> The recent rise of digital currencies opens the door to their use in parallel alongside official currencies ("dollar'') for pricing and transactions. We construct a simple New Keynesian framework with parallel currencies as pricing units and sticky prices.  Relative prices become a state variable. Exchange rate shocks can arise even without other sources of uncertainty. A one-time exchange rate appreciation for a parallel currency leads to persistent redistribution towards the dollar sector and dollar inflation. The share of the non-dollar sector increases when prices in the dollar sector become less sticky and when firms can choose the pricing currency. 
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