What About the Impact of Dollarization on Poverty and Inequality?

Alberto Chong and Soojin Kim
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Alberto Chong: Department of Economics, Georgia State University and Department of Economics, Universidad del Pacifico
Soojin Kim: Department of Economics, Georgia State University

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: Dollarization, often used to stabilize economies facing macroeconomic instability, has been studied for its macroeconomic impacts. However, its socio-economic consequences remain largely unexplored. This study addresses this gap by estimating the causal effects of dollarization on poverty and inequality. Using a dynamic panel data approach, we find that increased dollarization leads to higher poverty and inequality. We propose two potential pathways: an expanded informal sector and depressed consumption, due to dollarization.

Pages: 35 pages
Date: 2025-03
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Persistent link: https://EconPapers.repec.org/RePEc:ays:ispwps:paper2506

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