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Dollarization in Ecuador: A Post-Keynesian Analysis

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  • Kenneth P. Jameson

Abstract

Ecuador's dollarization was no marginal optimization decision. It was fundamental, dramatic and designed to completely transform central elements of the economy. Since orthodox, a-historical perspectives are inadequate in explaining such significant policy reversals, the paper uses a "post-keynesian institutionalist" explanatory framework (PKI). An Appendix surveys the twenty-year evolution of this effort to combine post-keynesian analysis with institutionalism. The paper's sections critique three orthodox explanations of dollarization, showing why they are unsatisfactory accounts of Ecuador's experience, examines the heterodox literature on exchange rate issues, introduces the PKI concepts used to explain Ecuador's dollarization, considers the actual dollarization process in Ecuador from a PKI perspective, and finally extrapolates from that treatment to the

Suggested Citation

  • Kenneth P. Jameson, 2004. "Dollarization in Ecuador: A Post-Keynesian Analysis," Working Paper Series, Department of Economics, University of Utah 2004_05, University of Utah, Department of Economics.
  • Handle: RePEc:uta:papers:2004_05
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    References listed on IDEAS

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    2. Tony Lawson, 1994. "The Nature of Post Keynesianism and Its Links to Other Traditions: A Realist Perspective," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 16(4), pages 503-538, July.
    3. Hyman P. Minsky, 1996. "Uncertainty and the Institutional Structure of Capitalist Economies," Economics Working Paper Archive wp_155, Levy Economics Institute.
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    5. John T. Harvey, 2001. "Exchange Rate Theory and “the Fundamentals”," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 24(1), pages 3-15, September.
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    7. Clements, Benedict & Schwartz, Gerd, 1993. "Currency substitution: The recent experience of Bolivia," World Development, Elsevier, vol. 21(11), pages 1883-1893, November.
    8. McKinnon, Ronald I., 2001. "The problem of dollar encroachment in emerging markets," Journal of Policy Modeling, Elsevier, vol. 23(3), pages 301-319, April.
    9. Ernesto H. Stein & Natalia Salazar & Roberto Steiner & Eugenio Díaz-Bonilla & Marco Bonomo & Juan C. Jaramillo & Hector E. Schamis & Alberto Pascó-Front & Piero Ghezzi & Maria Cristina Terra & José De, 2001. "The Currency Game: Exchange Rate Politics in Latin America," IDB Publications (Books), Inter-American Development Bank, number 77398 edited by Ernesto H. Stein & Jeffry Frieden, February.
    10. Guillermo A. Calvo & Alejandro Izquierdo & Ernesto Talvi, 2002. "Sudden Stops, the Real Exchange Rate and Fiscal Sustainability: Argentina's Lessons," IDB Publications (Working Papers) 1909, Inter-American Development Bank.
    11. Alejandro Izquierdo & Ernesto Talvi & Guillermo A. Calvo, 2002. "Sudden Stops, the Real Exchange Rate and Fiscal Sustainability: Argentina's Lessons," Research Department Publications 4299, Inter-American Development Bank, Research Department.
    12. Karras, Georgios, 2002. "Costs and Benefits of Dollarization: Evidence from North, Central, and South America," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 17, pages 502-516.
    13. repec:idb:brikps:77398 is not listed on IDEAS
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    15. Arestis, Philip, 1996. "Post-Keynesian Economics: Towards Coherence," Cambridge Journal of Economics, Oxford University Press, vol. 20(1), pages 111-135, January.
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    More about this item

    Keywords

    Dollarization; Ecuador; Dollar bloc; Post-keynesian; Institutionalist;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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