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“Dollarization and the Relationship Between EMBI and Fundamentals Latin American Countries”

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  • María Lorena Mari del Cristo

    ()
    (Faculty of Economics, University of Barcelona)

  • Marta Gómez-Puig

    ()
    (Faculty of Economics, University of Barcelona)

Abstract

This paper presents empirical evidence on the interrelationship that exists between the evolution of the Emerging Markets Bonds Index (EMBI) and some macroeconomic variables in seven Latin American countries; two of them (Ecuador and Panama), full dollarized. We make use of a Cointegrated Vector framework to analyze the short run effects from 2001 to 2009. The results suggest that EMBI is more stable in dollarized countries and that its evolution influences economic activity in non-dollarized economies; suggesting that investors confidence might be higher in dollarized countries where real and financial economic evolution are less tied than in non-dollarized ones.

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File URL: http://www.ub.edu/irea/working_papers/2014/201406.pdf
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Bibliographic Info

Paper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 201406.

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Length: 38 pages
Date of creation: Mar 2014
Date of revision: Mar 2014
Handle: RePEc:ira:wpaper:201406

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Postal: Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona
Web page: http://www.ub.edu/irea/
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Keywords: Dollarization; emerging markets; Latin American countries; Cointegrated VAR; EMBI; exchange rate regime. JEL classification: C32; E44; F30;

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