The reduction of macroeconomic vulnerability in emerging markets is at the core of the research agenda. In this context, liability dollarization plays a vital role and its implications have been addressed in the literature via a quot;financial acceleratorquot; mechanism. After allowing for...

Based on the significance of a Minimum Variance Portfolio (MVP) for the understanding of dollarization equilibria, a significant strand of the debate concerned with the driving forces behind this phenomenon has focused on analyzing the determinants of the relative volatility of inflation...

One distinguishable characteristic of emerging market economies is that they are not financially robust. These economies are incapable of smoothing out large external shocks, as sudden capital outflows imply large and abrupt swings in the real exchange rate. Using a small open-economy model,...

After an impressive 12 point reduction in Peruvian monetary poverty, questions have been raised about the extent in which these figures mask deprivation in several other aspects critical for human development. We propose using the Alkire-Foster multidimensional headcount to address this issue,...

After almost 20 years of prudent macro policies, Peru seems in better shape than before to withstand the effects of a financial crisis. Progress, however, has left some policy areas unscathed and the labor market is one of them. In this paper we analyze the potential effects of the crisis on...

The reduction of macroeconomic vulnerability in emerging markets is at the core of the research agenda. In this context, liability dollarization plays a vital role and its implications have been addressed in the literature via a “financial accelerator” mechanism. After allowing for different...

Financial dollarization creates design problems for economic policy as increases the level of financial vulnerability. However, countries with high levels of dollarization have done almost nothing to reduce it. In this paper we study two ways to do it and we evaluate them within a model that...