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Can dollarization constrain a populist leader? The case of Rafael Correa in Ecuador

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  • Cachanosky, Nicolás
  • Salter, Alexander W.
  • Savanti, Ignacio

Abstract

Rafael Correa's presidency in Ecuador (2007 – 2017) exemplifies left-leaning populist regimes in Latin America. However, there is a key difference: Ecuador is a dollarized economy. This removes the possibility of fiscal dominance over monetary policy as is common in populist regimes. This paper studies how dollarization constraints a populist leader. We discuss the incentives of a budget constraint immune to monetization and the failed attempt to launch a national digital currency.

Suggested Citation

  • Cachanosky, Nicolás & Salter, Alexander W. & Savanti, Ignacio, 2022. "Can dollarization constrain a populist leader? The case of Rafael Correa in Ecuador," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 430-442.
    • Handle: RePEc:eee:jeborg:v:200:y:2022:i:c:p:430-442
    DOI: 10.1016/j.jebo.2022.06.006
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    3. Pan, Wei-Fong, 2023. "Household debt in the times of populism," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 202-215.

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    More about this item

    Keywords

    Ecuador; Dollarization; Populism;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General

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