Dollarization and economic interdependence: The case of Ecuador
Abstract: Economic theory suggests that dollarization increases the degree of interdependence between the dollarized economy and the anchor country. We test this theory for the case of the U.S. and Ecuador. We perform cointegration and common cycles tests for data at the aggregate and industry level...
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| Autores principales: | , , |
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| Lenguaje: | English |
| Publicado: |
ILADES. Universidad Alberto Hurtado.
2021
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| Materias: | |
| Acceso en línea: | http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-88702021000100085 |
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| Sumario: | Abstract: Economic theory suggests that dollarization increases the degree of interdependence between the dollarized economy and the anchor country. We test this theory for the case of the U.S. and Ecuador. We perform cointegration and common cycles tests for data at the aggregate and industry levels. The results show that the economies of the U.S. and Ecuador were interrelated prior to dollarization. The interrelation increased after Ecuador adopted the U.S. dollar. This finding holds true for various Ecuadorian industries. Synchronization for the case of the financial industry is particularly revealing, as it shows how dollarization leads to the integration of financial markets. |
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