Ize, Alain.
Dollarization, Monetary Policy, and the Pass-Through Alain Ize. [electronic resource] / Alain Ize. - Washington, D.C. : International Monetary Fund, 2002. - 1 online resource (34 p.) - IMF Working Papers; Working Paper ; No. 02/188 . - IMF Working Papers; Working Paper ; No. 02/188 .
This paper explores how real dollarization (dollar indexing of wages), financial dollarization (dollar denomination of financial contracts), and monetary policy interact in a general equilibrium, new open-economy macroeconomics model with real shocks. Real dollarization is avoided as long as the home monetary authorities conduct monetary policy optimally (maximize local welfare). Suboptimal monetary policies are more likely to induce real dollarization when the correlation between domestic and external shocks is high, since in this case the (presumably optimal) foreign monetary policy guarantees a better level of protection against macroeconomic uncertainty. While real dollarization contributes to financial dollarization, important asymmetries between the two were found.
1451859570 : 15.00 USD
1018-5941
10.5089/9781451859577.001 doi
Inflation
Monetary Authorities
Open Economy Macroeconomics
Optimal Monetary Policy
Small Open Economy
Peru
Dollarization, Monetary Policy, and the Pass-Through Alain Ize. [electronic resource] / Alain Ize. - Washington, D.C. : International Monetary Fund, 2002. - 1 online resource (34 p.) - IMF Working Papers; Working Paper ; No. 02/188 . - IMF Working Papers; Working Paper ; No. 02/188 .
This paper explores how real dollarization (dollar indexing of wages), financial dollarization (dollar denomination of financial contracts), and monetary policy interact in a general equilibrium, new open-economy macroeconomics model with real shocks. Real dollarization is avoided as long as the home monetary authorities conduct monetary policy optimally (maximize local welfare). Suboptimal monetary policies are more likely to induce real dollarization when the correlation between domestic and external shocks is high, since in this case the (presumably optimal) foreign monetary policy guarantees a better level of protection against macroeconomic uncertainty. While real dollarization contributes to financial dollarization, important asymmetries between the two were found.
1451859570 : 15.00 USD
1018-5941
10.5089/9781451859577.001 doi
Inflation
Monetary Authorities
Open Economy Macroeconomics
Optimal Monetary Policy
Small Open Economy
Peru