Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper tests several explanations for financial dollarization (FD), with an emphasis on Latin America. The results provide evidence that FD is a rational response to inflation uncertainty. The paper builds on previous research by finding that an exchange rate policy biased towards currency depreciation and currency mismatches tends to contribute to high FD and that FD is highly persistent. These results suggest that countries with significant FD should encourage the use of domestic currency by maintaining macroeconomic stability; allowing more exchange rate flexibility and less bias towards currency depreciation; and adapting prudential regulations to ensure that costs associated with FD are fully internalized in financial contracts. At the same time, restoring confidence in the domestic currency may take many years of sound policies.

Currency question -- Latin America. --- Electronic books. -- local. --- Monetary policy -- Latin America. --- Finance --- Business & Economics --- Money --- Monetary policy --- Currency question --- Fiat money --- Free coinage --- Monetary question --- Scrip --- Currency crises --- Finance, Public --- Legal tender --- Banks and Banking --- Foreign Exchange --- Inflation --- Money and Monetary Policy --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Portfolio Choice --- Investment Decisions --- Financial Institutions and Services: General --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Development Planning and Policy: Trade Policy --- Factor Movement --- Foreign Exchange Policy --- Price Level --- Deflation --- Monetary economics --- Banking --- Currency --- Foreign exchange --- Macroeconomics --- Currencies --- Dollarization --- Bank deposits --- Exchange rate policy --- Financial services --- Prices --- Banks and banking --- Brazil

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

We provide one of the first attempts at explaining the differences in the crisis impact across developing countries and emerging markets. Using cross-country regressions to explain the factors driving growth forecast revisions after the eruption of the global crisis, we find that a small set of variables explain a large share of the variation in growth revisions. Countries with more leveraged domestic financial systems and more rapid credit growth tended to suffer larger downward revisions to their growth outlooks. For emerging markets, this financial channel trumps the trade channel. For a broader set of developing countries, however, the trade channel seems to have mattered, with countries exporting more advanced manufacturing goods more affected than those exporting food. Exchange-rate flexibility clearly helped in buffering the impact of the shock. There is also some -weaker-evidence that countries with a stronger fiscal position prior to the crisis were hit less severely. We find little evidence for the importance of other policy variables.

Business & Economics --- Economic Theory --- Financial crises. --- Global Financial Crisis, 2008-2009. --- Global Economic Crisis, 2008-2009 --- Subprime Mortgage Crisis, 2008-2009 --- Crashes, Financial --- Crises, Financial --- Financial crashes --- Financial panics --- Panics (Finance) --- Stock exchange crashes --- Stock market panics --- Financial crises --- Crises --- Exports and Imports --- Finance: General --- Foreign Exchange --- Money and Monetary Policy --- General Financial Markets: General (includes Measurement and Data) --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Trade: General --- Currency --- Foreign exchange --- Finance --- Monetary economics --- International economics --- Emerging and frontier financial markets --- Exchange rate flexibility --- Credit --- Exchange rates --- Exports --- Financial services industry

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This study examines external and domestic influences on Latin America’s economic performance over the past decade and a half. It notes that over the past few years, macroeconomic policies have strengthened and structural reforms have been implemented. Together with a favorable external environment, these policies have contributed to Latin America’s relatively sharp economic recovery from its last recession. The study discusses the priorities for the region’s reform agenda that could help to ensure that this growing prosperity becomes entrenched. It also makes observations on the future roles of the major policymakers involved--the governments in the region; the international financial institutions, and especially the IMF; and industrial country governments.

International Monetary Fund --- Latin America --- Economic policy. --- Economic conditions --- Internationaal monetair fonds --- International monetary fund --- Banks and Banking --- Exports and Imports --- Foreign Exchange --- Money and Monetary Policy --- Public Finance --- Debt --- Debt Management --- Sovereign Debt --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Trade Policy --- International Trade Organizations --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Public finance & taxation --- Macroeconomics --- Monetary economics --- Banking --- International economics --- Public debt --- Inflation --- Fiscal policy --- Expenditure --- Prices --- Commercial banks --- Financial institutions --- Debts, Public --- Banks and banking --- Foreign exchange --- Monetary policy --- Mexico