On Dollarization

11 Pages Posted: 6 May 2003

See all articles by Guillermo A. Calvo

Guillermo A. Calvo

Columbia University - School of International & Public Affairs (SIPA); National Bureau of Economic Research (NBER)

Abstract

The paper examines the case for dollarization in emerging market economies. It is claimed that dollarization becomes an attractive monetary regime when account is taken of recent financial turmoil in such economies. The case is further strengthened by the fact that these economies have a penchant for acquiring dollar debts (i.e., liability dollarization). However, exchange rate misalignment and deflation are potentially serious problems, unless appropriate fiscal and public sector prices policies are implemented, in addition to establishing a financial sector whose assets and liabilities face parallel relative price risks.

JEL Classification: F31, F41

Suggested Citation

Calvo, Guillermo A., On Dollarization. The Economics of Transition, Vol. 10, No. 2, pp. 393-403, 2002. Available at SSRN: https://ssrn.com/abstract=317345

Guillermo A. Calvo (Contact Author)

Columbia University - School of International & Public Affairs (SIPA) ( email )

420 West 118th Street
New York, NY 10027
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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