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Lessons from Latin America Dollarization in the Twenty First Century

  • Nicolas Cachanosky EMAIL logo , Emilio Ocampo and Alexander W. Salter
Published/Copyright: April 3, 2023

Abstract

This paper looks at twenty first-century dollarization in Latin America. We emphasize that dollarization is a complex reform that can be implemented in many different ways. We draw three important lessons from these experiences: (1) keeping the central bank after dollarizing is an unnecessary institutional vulnerability that facilitates compulsive de-dollarization, (2) public opinion offers the most important defense of dollarization against populist attempts at reversal, and (3) even if dollarization is not supported with structural reforms (or such reforms are reversed), it remains superior to the counterfactual of no reforms with persistent, high and volatile inflation.


Corresponding author: Nicolas Cachanosky, Center for Free Enterprise, The University of Texas at El Paso, El Paso, TX, USA, E-mail:

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Received: 2023-01-07
Accepted: 2023-03-07
Published Online: 2023-04-03

© 2023 Walter de Gruyter GmbH, Berlin/Boston

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