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 that GDP per capita growth has not been statistically different in dollarized and in non-dollarized countries. 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.

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Additional Information

ISSN
1538-4616
Print ISSN
0022-2879
Pages
pp. 269-282
Launched on MUSE
2006-04-24
Open Access
No
Archive Status
Archived 2007
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