Dollarization in Latin America: Recent Evidence and Some Policy Issues

19 Pages Posted: 15 Feb 2006

See all articles by Miguel A. Savastano

Miguel A. Savastano

Monetary and Capital Markets Departrment

Date Written: January 1996

Abstract

This paper examines the pattern of dollarization in Latin America, focusing on the experience of five countries (Argentina, Bolivia, Mexico, Peru and Uruguay) during 1970-1993. It presents evidence on the relative size of dollarization, the allocation of foreign currency deposits, and the behavior of money velocity. The discussion stresses the role of institutional factors, macroeconomic conditions, and the dynamics of money demand in shaping the dollarization process; it also highlights the shortcomings of indicators frequently employed to analyze the phenomenon. The paper provides a brief critical assessment of the empirical literature on dollarization, and identifies areas where further research seems warranted.

JEL Classification: F41

Suggested Citation

Savastano, Miguel A., Dollarization in Latin America: Recent Evidence and Some Policy Issues (January 1996). IMF Working Paper No. 96/4, Available at SSRN: https://ssrn.com/abstract=882905

Miguel A. Savastano (Contact Author)

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