Lessons from Latin America Dollarization in the Twenty First Century

Nicolas Cachanosky, Emilio Ocampo () and Salter Alexander W.
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Salter Alexander W.: Free Market Institute, Texas Tech University, Lubbock, TX, USA

The Economists' Voice, 2023, vol. 20, issue 1, 25-42

Abstract: This paper looks at twenty first-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 reforms with persistent, high and volatile inflation.

Keywords: constitutional monetary policy; dollarization; Latin America (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1515/ev-2023-0001

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