Addicted to Dollars
Опубликовано на портале: 10-12-2003
NBER Working Paper Series. 2003. W10015 .
This paper attempts to move the discussion forward and shed light on the critical questions by proposing a measure of dollarization that is broad both conceptually and in terms of country coverage. We use this measure to identify trends in the evolution of dollarization in the developing world in the last two decades, and to ascertain the consequences that dollarization has had on the effectiveness of monetary and exchange rate policy. We find that, contrary to the general presumption in the literature, a high degree of dollarization does not seem to be an obstacle to monetary control or to disinflation. A level of dollarization does, however, appear to increase exchange rate pass-through, reinforcing the claim that 'fear of floating' is a greater problem for highly dollarized economies. We also review the developing countries' record in combating their addiction to dollars.
Concretely, we try to explain why some countries have been able to avoid certain forms of the addiction, and examine the evidence on successful de-dollarization.
The Responsiveness of Consumer Prices to Exchange Rates and the Implications for Exchange-Rate Policy: A Survey of a few Recent New Open-Economy Macro Models
NBER Working Paper Series. 2002. No. 8725.