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Dollarization and the relationship between EMBI and fundamentals Latin American countries

  • María Lorena Mari del Cristo

    ()

    (Department of Economic Theory, Universitat de Barcelona)

  • Marta Gómez-Puig

    ()

    (Department of Economic Theory, Universitat de Barcelona and RFA-IREA)

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.aeefi.com/RePEc/pdf/defi14-05.pdf
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Paper provided by Asociación Española de Economía y Finanzas Internacionales in its series Working Papers with number 14-05.

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Length: 36 pages
Date of creation: Feb 2014
Date of revision:
Handle: RePEc:aee:wpaper:1405
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