O'Reilly logo

Understanding Dollarization by Erick W. Rengifo, Emre Ozsoz

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

6Policy Interventions in Dollarized Economies

6.1Introduction

Formulating and executing monetary policy in a partially dollarized economy is a demanding process for central bankers.

Up to this point, the reader should understand the following. First, movements in exchange rates and inflation rates are closely related, more so in highly dollarized economies. Furthermore, as explained by Alvarez-Plata and Garca-Herrero (2008), in highly dollarized economies there is stronger exchange rate pass-through, since many non-traded goods are priced in foreign currency, making their prices highly sensitive to exchange rate fluctuations.

Second, dollarization occurs not only in periods of high inflation, but also when economic agents lose trust in their ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required