American movie director Joe Ritter's firmest impression of Lima is not the museums filled with Inca relics but all "the guys with calculators in the streets."

"When I first got here, I said to myself, `What are they all selling calculators for?' " Ritter told a Lima newspaper.They're not selling calculators, they're using them in a reflection of Peru's illicit cocaine industry and the huge profits it generates.

Authorities deny that drug money bolsters Peru's economy. But as inflation gallops at 500 percent a year and consumer shortages develop, some experts say cocaine profits are keeping Peru from plunging faster into economic chaos.

"The financial situation of the country is much worse than it appears," says Alejandro Toledo Man-rique, a Stanford-trained economist, "and narco-dollars are providing a financial cushion that is helping the economy survive."

Without access to dollars, Toledo says, factories crippled by a lack of imported parts would close altogether and prices would rise even faster.

Peru, a nation of 21 million on South America's Pacific coast, is the world's largest grower of the coca plant used in making cocaine and the source of more than half the cocaine entering the United States.

Drug lords place much of their cocaine profits in offshore banks and other safe havens. But some dollars remain in Peru to pay coca plant growers and to finance drug processing.

Some finds its way to the "calculator sellers" who so impressed Ritter - armies of money changers standing on curbs with calculators in one hand and wads of U.S. dollars or Peruvian currency in the other.

Until recently, U.S. narcotics experts believed drug smugglers pumped an average of $600 million to $700 million a year into Peru, a sum roughly equal to 25 percent of the nation's legal exports.

But a new study indicates that cocaine traffickers leave more than twice that amount of cash in the nation annually.

About $1.6 billion enters Peru's economy each year from drug profits and $1.1 billion of that amount is washed through state and private banks, according to the study by ESAN, Peru's main graduate business school, Toledo says.

The study said money changers make an average of 12 flights a day between Lima and coca-growing regions, primarily the lush Upper Huallaga Valley.

At jungle airstrips in the valley, the best place in the world to grow coca, smugglers land and exchange bags of U.S. dollars for drums of semi-refined cocaine, police sources say. Ground time averages seven minutes.

State and private banks in the valley and elsewhere in Peru change large quantities of money with few questions, Toledo says.

The business school refuses to make its study public because of government sensitivity about the impact of drug dollars on the economy, he says. An undercover police officer co-authored the study as a master's thesis.

The flood of drug dollars on Lima's streets contrasts with the nearly empty coffers of the Central Reserve Bank. President Alan Garcia's hard-line policy on limiting payments to service Peru's $15.4 billion foreign debt has made his nation a pariah among foreign creditors.

Garcia, a fiery populist, says drug profits damage Peru's economy. On an Upper Huallaga Valley visit in August, he told U.S. reporters drug dollars encourage speculation and leave less money for productive investments.

"If we did not have this flood of dollars, a lot of people would install factories and produce instead of buying the dollars," he said. "So it is not true that these hundreds of millions of dollars that enter Peru from drug trafficking help."

But he has permitted businesses to finance imports with dollars bought from money changers, a step experts say is easing shortages of consumer goods.

He also has taken advantage of cocaine earnings to ease economic pressures, and Toledo says there is a risk the economy may deteriorate because it is being "artificially narcotized."

Garcia lifted a ban on non-licensed money changers in March. Now an estimated 2,000 ply their trade throughout Lima and not just at the downtown Ocona Street changing center residents jokingly dub "Wall Street."

Fluctuations in the street value of the Peruvian currency, the inti, are often attributed to arrivals or delays in shipments of dollars from the coca-growing regions.

In the city of Tingo Maria, at the entrance to the Huallaga Valley, "dozens of agents arrive daily and move up along the highways to Tocache, Sion, Uchiza or El Ramal," all major cocaine centers where dollars are easily available, the respected newspaper El Co-mercio reported recently.