Strict Dollarization and Economic Performance: An Empirical Investigation

Sebastian Edwards and I. Igal Magendzo

No 9820, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper we analyze the macroeconomic record of 'strictly dollarized' economies. In particular we investigate whether dollarized countries have historically exhibited faster growth and lower volatility than countries with a domestic currency. We analyze this issue by using a treatment regression analysis that estimates jointly the probability of being a dollarized country, and outcome equations. Our analysis indicates that the probability of being a dollarized country depends on regional, geographical, political and structural variables. Our results also suggest GDP per capita growth has not been statistically different in dollarized and in non-dollarized ones. We also find that volatility has been significantly higher in dollarized than in non-dollarized economies. These results are robust to the estimation technique, and to the sample used.

JEL-codes: F30 F31 (search for similar items in EconPapers)
Date: 2003-07
New Economics Papers: this item is included in nep-ifn and nep-lam
Note: IFM
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Citations: View citations in EconPapers (9)

Published as Edwards, Sebastian and I. Igal Magendzo. "Dollarization And Economic Performance: What Do We Really Know?" International Journal of Finance and Economics 8(4): 351-363, October 2003
Published as Edwards, Sebastian and I. Igal Magendzo. "Strict Dollarization and Economic Performance: An Empirical Investigation," Journal of Money, Credit and Banking, 38(1): 269-282, February 2006

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Journal Article: Strict Dollarization and Economic Performance: An Empirical Investigation (2006)
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