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Is Dollarization the Right Option? Financial Fragility, Original Sin and Fear of Floating

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  • Roman Horváth

Abstract

This paper focuses on the option of dollarization or euroization for emerging-market economies. There are no “one-size-fits-all” exchange-rate policies for emerging- -market economies; however, there are macroeconomic disadvantages associated with flexible exchange-rate regimes in such economies. Similarly, the timing of euro adoption in EU accession countries is a complex matter as well. The paper compares the costs and benefits of euro adoption, in particular to unilateral euroization.

Suggested Citation

  • Roman Horváth, 2004. "Is Dollarization the Right Option? Financial Fragility, Original Sin and Fear of Floating," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 54(5-6), pages 252-266, May.
    • Handle: RePEc:fau:fauart:v:54:y:2004:i:5-6:p:252-266
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    References listed on IDEAS

    as
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    6. Andrzej Bratkowski & Jacek Rostowski, 2002. "The EU attitude to unilateral euroization: Misunderstandings, real concerns and sub‐optimal admission criteria," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(2), pages 445-468, July.
    7. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(2), pages 379-408.
    8. Ricardo Hausmann & Michael Gavin & Carmen Pagés & Ernesto H. Stein, 1999. "Financial Turmoil and the Choice of Exchange Rate Regime," IDB Publications (Working Papers) 4128, Inter-American Development Bank.
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    More about this item

    Keywords

    dollarization; euroization; exchange-rate regimes; emerging-market economies;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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