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Strict Dollarization and Economic Performace Revisited

Author

Listed:
  • Johnny Thornton

    (University of East Anglia-US department of the Treasury)

  • Chrysovalantis Vasilakis

    (Bangor University)

Abstract

We revisit the historical record of the economic performance of strictly dollarizedeconomies relative to that economies of non-dollarized economies as previously examined byEdwards (2001) and Edwards and Magendzo (2003, 2006). We extend their work to takeadvantage of the experience of more recently dollarized economies, employ a larger countrysample and a longer sample period, use panel as opposed to cross-section data, and employ avariety of econometric techniques, including to deal with potential endogeneity problems. Ourresults suggest that overall countries that adopted dollarization experienced higher average GDPgrowth rates and lower inflation rates and inflation volatility than countries that did not adoptdollarization. Moreover, even GDP growth appears to have been less volatile in dollarizedcountries in recent years.

Suggested Citation

  • Johnny Thornton & Chrysovalantis Vasilakis, 2024. "Strict Dollarization and Economic Performace Revisited," Working Papers 322, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:322
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    File URL: https://rednie.eco.unc.edu.ar/files/DT/322.pdf
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    References listed on IDEAS

    as
    1. John Thornton & Chrysovalantis Vasilakis, 2018. "Fiscal Rules And Government Borrowing Costs: International Evidence," Economic Inquiry, Western Economic Association International, vol. 56(1), pages 446-459, January.
    2. Koráb, Petr & Fidrmuc, Jarko & Dibooglu, Sel, 2023. "Growth and inflation tradeoffs of dollarization: Meta-analysis evidence," Journal of International Money and Finance, Elsevier, vol. 137(C).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Strict dollarization; GDP growth; inflation; volatility;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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