Lessons from Dollarization in Latin America in the 21st Century

30 Pages Posted: 6 Jan 2023

See all articles by Nicolas Cachanosky

Nicolas Cachanosky

The University of Texas at El Paso; American Institute for Economic Research; UCEMA Friedman-Hayek Center for the Study of a Free Society

Emilio Ocampo

UCEMA

Alexander William Salter

Texas Tech University - Rawls College of Business; American Institute for Economic Research

Date Written: January 5, 2023

Abstract

This paper looks at 21st-century dollarization in Latin America. We emphasize that dollarization is a complex reform that can be implemented in many different ways. We draw three important lessons from these experiences: (1) keeping the central bank after dollarizing is an unnecessary institutional vulnerability that facilitates compulsive de-dollarization, (2) public opinion offers the most important defense of dollarization against populist attempts at reversal, and (3) even if dollarization is not supported with structural reforms (or such reforms are reversed), it remains superior to the counterfactual of no re-forms with persistent, high and volatile inflation.

Keywords: dollarization, constitutional monetary policy, Latin America

JEL Classification: E42, E50

Suggested Citation

Cachanosky, Nicolas and Ocampo, Emilio and Salter, Alexander William, Lessons from Dollarization in Latin America in the 21st Century (January 5, 2023). Available at SSRN: https://ssrn.com/abstract=4318258 or http://dx.doi.org/10.2139/ssrn.4318258

Nicolas Cachanosky (Contact Author)

The University of Texas at El Paso

500 West University Avenue
El Paso, TX 79968
United States

HOME PAGE: http://https://www.utep.edu/

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

UCEMA Friedman-Hayek Center for the Study of a Free Society ( email )

Buenos Aires
Argentina

Emilio Ocampo

UCEMA ( email )

Córdoba 374
1054 Buenos Aires
Argentina

Alexander William Salter

Texas Tech University - Rawls College of Business ( email )

Lubbock, TX 79409
United States

HOME PAGE: http://awsalter.com

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

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