De-dollarizing the Peruvian Economy: A Portfolio Approach
"Financial dollarization creates design problems for economic policy as increases the level of financial vulnerability. However, countries with high levels of dollarization have done almost nothing to reduce it. In this paper we study two ways to do it and we evaluate them within a model that emphasizes a portfolio approach. We calibrate the model to replicate the Peruvian economy. The two policy options that we consider are: (i) increasing the risk of dollar deposits, reducing the level of coverage in the safety net mechanism; (ii) increasing the relative volatility of inflation vis-à-vis real depreciation. Our results show that the former has the potential risk of lowering the level of financial intermediation, whereas the second might be more effective to de-dollarize the economy."
|Date of creation:||Jul 2003|
|Date of revision:||Sep 2003|
|Contact details of provider:|| Web page: http://www.up.edu.pe/|
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- Broda, Christian & Yeyati, Eduardo Levy, 2006.
"Endogenous Deposit Dollarization,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 38(4), pages 963-988, June.
- Christian Broda & Eduardo Levy Yeyati, 2003. "Endogenous deposit dollarization," Staff Reports 160, Federal Reserve Bank of New York.
- Christian Broda & Eduardo Levy Yeyati, 2003. "Endogenous Deposit Dollarization," Business School Working Papers dieciseis, Universidad Torcuato Di Tella.
- Eduardo Levy Yeyati, 2003. "Financial Dedollarization: A Carrot and Stick Approach," Business School Working Papers nueve, Universidad Torcuato Di Tella.
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- Moron, Eduardo & Winkelried, Diego, 2005. "Monetary policy rules for financially vulnerable economies," Journal of Development Economics, Elsevier, vol. 76(1), pages 23-51, February.
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- Eduardo MorÃ³n & Diego Winkelried, 2003. "Monetary Policy Rules for Financially Vulnerable Economies," IMF Working Papers 03/39, .
- Gerardo Licandro & José Antonio Licandro, 2003. "Building the Dedollarization Agenda: Lessons from the Uruguayan Case," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 193-218, July-Dece. Full references (including those not matched with items on IDEAS)
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