Abstract
This article focuses on dollarization, a situation in which a foreign currency (often the US dollar) replaces a country’s currency in performing one or more of the basic functions of money. The distinction between official dollarization and endogenous dollarization is discussed, as are the concepts of currency substitution and liability dollarization. Implications for monetary and exchange rate policy are emphasized.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsBibliography
Aghion, P., P. Bachetta, and A. Banerjee. 2001. Currency crises and monetary policy in an economy with credit constraints. European Economic Review 45: 1121–1150.
Arteta, C. 2005. Exchange rate regimes and financial dollarization: Does flexibility reduce currency mismatches in bank intermediation? Topics in Macroeconomics 5(1): 1226–1246.
Calvo, G.A. 1985. Currency substitution and the real exchange rate: The utility maximization approach. Journal of International Money and Finance 4: 175–188.
Calvo, G.A. 2005. Capital markets and the exchange rate with special reference to the dollarization debate in Latin America. In Emerging capital markets in turmoil, ed. G. Calvo. Cambridge, MA: MIT Press.
Cespedes, L., R. Chang, and A. Velasco. 2004. Balance sheets and exchange rate policy. American Economic Review 94: 1183–1193.
Chang, R. 1994. Endogenous currency substitution, inflationary finance, and welfare. Journal of Money, Credit, and Banking 26: 903–916.
Chang, R., and A. Velasco. 2002. Dollarization: Analytical issues. In Dollarization, ed. E. Levy-Yeyati and F. Sturzenegger. Cambridge, MA: MIT Press.
Craig, B., and C. Waller. 2004. Dollarization and currency exchange. Journal of Monetary Economics 51: 671–689.
Girton, L., and D. Roper. 1981. Theory and implications of currency substitution. Journal of Money, Credit, and Banking 13: 12–30.
Guidotti, P.E., and C.A. Rodriguez. 1992. Dollarization in Latin America: Gresham’s law in reverse? IMF Staff Papers 39: 518–544.
Ize, A., and E. Levy-Yeyati. 2003. Financial dollarization. Journal of International Economics 59: 323–347.
Jeanne, O. 2005. Why do emerging economies borrow in foreign currency? In Other people’s money, ed. B. Eichengreen and R. Hausmann. Chicago: University of Chicago Press.
Ortiz, G. 1983. Currency substitution in Mexico: The dollarization problem. Journal of Money, Credit, and Banking 15: 174–185.
Author information
Authors and Affiliations
Editor information
Copyright information
© 2018 Macmillan Publishers Ltd.
About this entry
Cite this entry
Chang, R. (2018). Dollarization. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2059
Download citation
DOI: https://doi.org/10.1057/978-1-349-95189-5_2059
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
eBook Packages: Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences