IDEAS home Printed from https://ideas.repec.org/p/bon/boncrc/crctr224_2021_306.html
   My bibliography  Save this paper

Financial Dollarization in Emerging Markets: Efficient Risk Sharing or Prescription for Disaster?

Author

Listed:
  • Lawrence Christiano
  • Husnu Dalgic
  • Armen Nurbekyan

Abstract

We present data that suggests financial dollarization is primarily a device for reallocating business cycle income risk between different people within emerging market economies, rather than across different countries. Although we identify sources of fragility in some aspects of dollarization, the common view that financial dollarization is a source of fragility is over-stated. We develop a simple model which formalizes the insurance view, which is consistent with the key crosscountry facts on interest rate differentials, deposit dollarization and exchange rate depreciations in recessions.

Suggested Citation

  • Lawrence Christiano & Husnu Dalgic & Armen Nurbekyan, 2021. "Financial Dollarization in Emerging Markets: Efficient Risk Sharing or Prescription for Disaster?," CRC TR 224 Discussion Paper Series crctr224_2021_306, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2021_306
    as

    Download full text from publisher

    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp306
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Forbes, Kristin & Friedrich, Christian & Reinhardt, Dennis, 2023. "Stress relief? Funding structures and resilience to the covid shock," Journal of Monetary Economics, Elsevier, vol. 137(C), pages 47-81.
    2. Benigno, Pierpaolo & Schilling, Linda M. & Uhlig, Harald, 2022. "Cryptocurrencies, currency competition, and the impossible trinity," Journal of International Economics, Elsevier, vol. 136(C).
    3. Santiago Camara & Maximo Sangiacomo, 2022. "Borrowing Constraints in Emerging Markets," Papers 2211.10864, arXiv.org.
    4. Eduardo A. Corso & Máximo Sangiácomo, 2023. "Financial de-dollarization in Argentina. When the wind always blows from the East," Working Papers 256, Red Nacional de Investigadores en Economía (RedNIE).
    5. Eduardo Corso & Maximo Sangiacomo, 2023. "Financial De-Dollarization in Argentina. When the Wind Always Blows from the East," BCRA Working Paper Series 2023106, Central Bank of Argentina, Economic Research Department.
    6. Eduardo Ariel Corso & Máximo Sangiacomo, 2021. "Desdolarización financiera en Argentina. Cuando el viento siempre sopla del Este," Asociación Argentina de Economía Política: Working Papers 4458, Asociación Argentina de Economía Política.
    7. Camila Casas & Sergii Meleshchuk & Yannick Timmer, 2020. "The Dominant Currency Financing Channel of External Adjustment," Borradores de Economia 1111, Banco de la Republica de Colombia.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bon:boncrc:crctr224_2021_306. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CRC Office (email available below). General contact details of provider: https://www.crctr224.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.