Dollarization In Developing Countries: Rational Remedy Or Domestic Dilemma?
AbstractThis paper reviews the policy implications of dollarization in developing economies. It outlines channels of U.S. currency access abroad and illustrates progressing stages of dollarization for various country examples. It analyzes the costs of large seigniorage losses facing domestic governments vis-a-vis the U.S. issuer. Finally, it provides three explanations for the observed inertia in dedollarization following domestic stabilization policies: (i) high transactions costs of switching monies, (ii) dollar revenues related to illegal commercial activities, and (iii) network externalities associated with foreign currency usage. Copyright 1996 Western Economic Association International.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Contemporary Economic Policy.
Volume (Year): 14 (1996)
Issue (Month): 3 (07)
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- Kenneth P. Jameson, 2003.
"Is It Possible to De-Dollarize? : The Case of Ecuador,"
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- Dotsey, Michael & Sarte, Pierre Daniel, 2000. "Inflation uncertainty and growth in a cash-in-advance economy," Journal of Monetary Economics, Elsevier, vol. 45(3), pages 631-655, June.
- Zaki, Mokhlis Y., 2001. "IMF-Supported Stabilization Programs and their Critics: Evidence from the Recent Experience of Egypt," World Development, Elsevier, vol. 29(11), pages 1867-1883, November.
- International Monetary Fund, 2011. "The Relationship Between Illicit Coca Production and Formal Economic Activity in Peru," IMF Working Papers 11/182, International Monetary Fund.
- Kamin, Steven B. & Ericsson, Neil R., 2003. "Dollarization in post-hyperinflationary Argentina," Journal of International Money and Finance, Elsevier, vol. 22(2), pages 185-211, April.
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