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Is It Possible to De-dollarize? The Case of Ecuador

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  • Kenneth P. Jameson

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Abstract

The policy reform termed dollarization, adoption of a foreign currency as the domestic currency, is widely believed to be irreversible. The paper presents counter examples, while noting that the Latin American "hard pegs" present problems that are more complex. It then uses Ecuador, the longest-lasting of the recent dollarizers, to examine all aspects of the possibility and process of de-dollarizing. Presentation of economic performance before and after dollarization leads to consideration of possible steps that could maintain the policy. Examination of the benefits of de-dollarization follows, with careful consideration of how a process of de-dollarization might be implemented. Since Ecuador may embark on this course, the paper provides a comprehensive and necessary examination of the issues involved

Suggested Citation

  • Kenneth P. Jameson, 2003. "Is It Possible to De-dollarize? The Case of Ecuador," Working Paper Series, Department of Economics, University of Utah 2003_07, University of Utah, Department of Economics.
  • Handle: RePEc:uta:papers:2003_07
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    References listed on IDEAS

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    1. repec:mes:jeciss:v:37:y:2003:i:3:p:643-663 is not listed on IDEAS
    2. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 379-408.
    3. Dean, James W., 2001. "Should Latin America's common law marriages to the US dollar be legalized? Should Canada's?," Journal of Policy Modeling, Elsevier, vol. 23(3), pages 291-300, April.
    4. Edgar L. Feige & Vedran Šošiæ & Michael Faulend & Velimir Šonje, 2002. "Unofficial Dollarization in Latin America: Currency Substitution, Network Externalities and Irreversibility," International Finance 0205002, EconWPA.
    5. Lee Alston & Andres Gallo, 2002. "The Political Economy of Bank Reform in Argentina Under Convertibility," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 5(1), pages 1-16.
    6. Owen F. Humpage, 2002. "An incentive-compatible suggestion for seigniorage sharing with dollarizing countries," Policy Discussion Papers, Federal Reserve Bank of Cleveland, issue Jun.
    7. Fanelli, José María & Heymann, Daniel, 2002. "Monetary dilemmas: Argentina in MERCOSUR," Estudios y Perspectivas – Oficina de la CEPAL en Buenos Aires 7, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    8. Michael Melvin & Bettina Peiers, 1996. "Dollarization In Developing Countries: Rational Remedy Or Domestic Dilemma?," Contemporary Economic Policy, Western Economic Association International, vol. 14(3), pages 30-40, July.
    9. A. Piatt Andrew, 1904. "The End of the Mexican Dollar," The Quarterly Journal of Economics, Oxford University Press, vol. 18(3), pages 321-356.
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    Cited by:

    1. Metin-Özcan, Kıvılcım & Us, Vuslat, 2007. "Dedollarization in Turkey after decades of dollarization: A myth or reality?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 385(1), pages 292-306.
    2. repec:ecr:col070:42014 is not listed on IDEAS
    3. Jean-François Ponsot, 2012. "Financement soutenable et création monétaire en régime de dollarisation : le cas de l'Équateur," Post-Print halshs-00687369, HAL.
    4. Jean-François Ponsot, 2005. "Stratégie monétaire des économies émergentes : les écueils de la dollarisation," Post-Print halshs-00098285, HAL.

    More about this item

    Keywords

    Dollarization; Ecuador; de-dollarization; Dollar bloc; exchange rate regime; seigniorage;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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