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We analyze a recent paper that claims that dollarizing an economy in the presence of a “dollar shortage” will provoke an immediate sharp reduction in real output and welfare. We find many problems with the model that supports this conclusion: confusion about the nature of a dollar shortage...
Persistent link: https://www.econbiz.de/10014347440
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Rafael Correa’s presidency in Ecuador (2007 – 2017) exemplifies left-leaning populist regimes in Latin America. However, there is a key difference: Ecuador is a dollarized economy. This removes the possibility of fiscal dominance over monetary policy as is common in populist regimes. This...
Persistent link: https://www.econbiz.de/10013310455
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We analyze a recent paper that claims that dollarizing an economy in the presence of a "dollar shortage" will provoke an immediate sharp reduction in real output and welfare. We find many problems with the model that supports this conclusion: confusion about the nature of a dollar shortage and...
Persistent link: https://www.econbiz.de/10014296365