Dollarization, exchange-rate anchor and international reserves

Paulo Nogueira Batista ()

Brazilian Journal of Political Economy, 1993, vol. 13, issue 3, 335-351

Abstract: Technical discussions of stabilization alternatives for Brazil have recently focusedon the utilization of the exchange-rate as a nominal anchor and measures that involvea degree of dollarization of the economy. The latter would imply official sanction for the increasingsubstitution of foreign for national currency, a kind of decision that the experienceof several Latin American countries has shown to be extremely difficult to reverse. Moreover,exchange-rate based stabilizations have often unleashed balance of payments crises. Thispaper reviews Argentina’s recent stabilization program and some of the lessons it may holdfor Brazil. It argues that the Argentinian approach, as well as some of its variations, cannotbe applied successfully in Brazil. JEL Classification: E31; F31.

Keywords: Dollarization; inflation; stabilization (search for similar items in EconPapers)
Date: 1993
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