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Dedollarization, Indexation and Nominalization: the Chilean experience


  • R. Valdes
  • L.O. Herrera


This paper revisits the Chilean experience with dollarization, indexation and nominalization in the 1958-2003 period. The purpose is to understand how Chile generally avoided dollarization and actually dedollarized in the 80s in order to draw some lessons for other countries. We find that many policies that Chile pursued are not easy to implement elsewhere. Some key characteristics of the Chilean process are related to initial institutional conditions and developments, whereas others are connected to macroeconomic performance and specific regulations. Indexation plays a key role in explaining how dollarization can be avoided

Suggested Citation

  • R. Valdes & L.O. Herrera, 2004. "Dedollarization, Indexation and Nominalization: the Chilean experience," Econometric Society 2004 Latin American Meetings 183, Econometric Society.
  • Handle: RePEc:ecm:latm04:183

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    References listed on IDEAS

    1. Juan Andrés Fontaine, 1991. "La Administración de la Política Monetaria en Chile, 1985-89," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 28(83), pages 109-130.
    2. Eyzaguirre, Nicolás & Larrañaga, Osvaldo, 1991. "Macroeconomía de las operaciones cuasifiscales en Chile," Series Históricas 21, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
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    Cited by:

    1. Kevin Cowan & José De Gregorio, 2007. "International Borrowing, Capital Controls, and the Exchange Rate: Lessons from Chile," NBER Chapters,in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, pages 241-296 National Bureau of Economic Research, Inc.
    2. Roberto Alvarez & Jose De Gregorio, 2014. "Understanding Differences in Growth Performance in Latin America and Developing Countries between the Asian and Global Financial Crises," Working Paper Series WP14-11, Peterson Institute for International Economics.
    3. Serge Jeanneau & Camilo E Tovar, 2008. "Financial stability implications of local currency bond markets: an overview of the risks," BIS Papers chapters,in: Bank for International Settlements (ed.), New financing trends in Latin America: a bumpy road towards stability, volume 36, pages 65-87 Bank for International Settlements.
    4. Alberto Naudon & Joaquín Vial, 2016. "The evolution of inflation in Chile since 2000," BIS Papers chapters,in: Bank for International Settlements (ed.), Inflation mechanisms, expectations and monetary policy, volume 89, pages 93-116 Bank for International Settlements.
    5. Nombulelo Braiton, 2011. "Dollarization in Cambodia; Causes and Policy Implications," IMF Working Papers 11/49, International Monetary Fund.

    More about this item


    Dollarization; indexation; UF.;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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