Working Paper: NBER ID: w9820
Authors: Sebastian Edwards; Igal Magendzo
Abstract: In this paper we analyze the macroeconomic record of 'strictly dollarized' economies. In particular we investigate whether dollarized countries have historically exhibited faster growth and lower volatility than countries with a domestic currency. We analyze this issue by using a treatment regression analysis that estimates jointly the probability of being a dollarized country, and outcome equations. Our analysis indicates that the probability of being a dollarized country depends on regional, geographical, political and structural variables. Our results also suggest GDP per capita growth has not been statistically different in dollarized and in non-dollarized ones. We also find that volatility has been significantly higher in dollarized than in non-dollarized economies. These results are robust to the estimation technique, and to the sample used.
Keywords: No keywords provided
JEL Codes: F30; F31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| regional, geographical, political, and structural variables (R50) | probability of being a dollarized country (F31) |
| dollarization (F31) | GDP per capita growth (O49) |
| dollarization (F31) | volatility in economic stability (E32) |