Dollarization and Economic Performance: An Empirical Investigation
In this paper I investigate the historical record of countries that have lived under a 'dollarized' monetary system. As it turns out, this is a very small group of counties, most of which have operated under very special circumstances, and for which there are very limited data. The results reported in this paper suggests that, when compared to other countries, the dollarized nations have: (a) have had significantly lower inflation; (b) grown at a significantly lower rate; (c) have had a similar fiscal record; (d) have not been spared from major current account reversals. Additionally, my analysis of Panama's case suggests that external shocks result in greater costs - in terms of lower investment and growth - in dollarized than in non-dollarized countries.
|Date of creation:||May 2001|
|Date of revision:|
|Publication status:||published as Edwards, Sebastian and I. Igal Magendzo. "Dollarization And Economic Performance: What Do We Really Know?," International Journal of Finance and Economics, 2003, v8(4,Oct), 351-363.|
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- Zeljko Bogetic, 2005. "Official Dollarization: Current Experiences and Issues, Cato Journal, Vol. 20, No. 2 (Fall 2000), 179-213," International Finance 0510006, EconWPA.
- Sebastian Edwards, 2001.
"Does the Current Account Matter?,"
NBER Working Papers
8275, National Bureau of Economic Research, Inc.
- Torsten Persson, 2001. "Currency unions and trade: how large is the treatment effect?," Economic Policy, CEPR;CES;MSH, vol. 16(33), pages 433-462, October.
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