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What About the Impact of Dollarization on Poverty and Inequality?

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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)

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.

Suggested Citation

  • Alberto Chong & Soojin Kim, 2025. "What About the Impact of Dollarization on Poverty and Inequality?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper2506, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:ays:ispwps:paper2506
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    File URL: https://icepp.gsu.edu/files/2025/03/paper2506.pdf
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