 Understanding Dollarisation: A Keynesian/Kaleckian PerspectiveReview of Political Economy, 2021, vol. 33, issue 4, 656-686 Abstract: What does ‘dollarisation’ mean in a world of endogenous money, i.e., in a world where money is not (only) created by printing pieces of paper, but (mainly) by making loans? Is it true that dollarisation only constitutes a limitation of sovereignty in the short run (making it harder to run standard stabilisation macro policies) or can it also slow a country’s growth process? To answer these questions, the paper builds a theoretical Keynesian-Kaleckian growth model for a dollarised economy within a framework of endogenous money. We will show that, ceteris paribus, the steady-state medium-term growth rate of a dollarised economy is lower than that of a country with its own currency. We will also show that a dollarised economy is more likely to be unstable than an economy with its own currency, in the specific sense that, everything else being equal, it is more likely for a dollarised economy to fall into a debt trap. Date: 2021 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:revpoe:v:33:y:2021:i:4:p:656-686 Ordering information: This journal article can be ordered from DOI: 10.1080/09538259.2020.1869401 Access Statistics for this article Review of Political Economy is currently edited by Steve Pressman and Louis-Philippe Rochon More articles in Review of Political Economy from Taylor & Francis Journals |
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