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How Does Dollarization Affect Real Volatility and Country Risk?

Author

Listed:
  • Jorge Eduardo Carrera

    (CACES, UBA - UNLP)

  • Mariano Feliz

    (CACES, UBA - PIETTE, CONICET- UNLP)

  • Demian Panigo

    (CACES, UBA - PIETTE, CONICET- UNLP)

Abstract

This study gives a non-traditional framework for the evaluation of an asymmetric monetary association (such as dollarization). We discuss the relationship between real volatility and country risk and determine the necessary conditions for dollarization to improve social welfare. We concentrate in two main aspects: 1) the degree of synchronization between the cycle of the leader and associated country, and 2) the effect and relative importance of the trade and financial channels. The cyclical correlation is calculated from different methodologies and the effect and size of the channels are extracted from the impulse-response functions and variance descompositions of a VEC Model. We apply our analytical framework to Argentina.

Suggested Citation

  • Jorge Eduardo Carrera & Mariano Feliz & Demian Panigo, 2000. "How Does Dollarization Affect Real Volatility and Country Risk?," Económica, Instituto de Investigaciones Económicas, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0(2), pages 73-136, July-Dece.
    • Handle: RePEc:akh:journl:514
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    File URL: https://revistas.unlp.edu.ar/Economica/article/view/8530/7077
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    Cited by:

    1. Robert Boyer & Julio Neffa César, 2007. "La crise argentine 1976-2001 : lectures institutionnalistes et régulationnistes," Working Papers halshs-00587696, HAL.
    2. Robert Boyer & Julio Neffa César, 2007. "La crise argentine 1976-2001 : lectures institutionnalistes et régulationnistes," PSE Working Papers halshs-00587696, HAL.

    More about this item

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • F3 - International Economics - - International Finance

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