Dollarization in El Salvador and Ecuador: a model worth following?
Moran, Benjamin P.
Looney, Robert E.
Adame, Laura R.
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This thesis explores de jure dollarization in El Salvador and Ecuador. De jure dollarization is the wholesale transition from using a country’s national currency to using another country’s currency as its own legal tender. This thesis looks at the histories of El Salvador and Ecuador in order to set the stage for the conversion to the U.S. dollar. It then looks at select macroeconomic indicators in both countries to determine if dollarization has been a beneficial policy decision for each country. The data suggests that dollarization has been a prudent choice for El Salvador and Ecuador. While the macroeconomic success of both countries cannot be wholly attributed to dollarization, it has enabled both countries to have low, stable inflation rates and interest rates that have contributed to positive macroeconomic outcomes. Since this thesis approaches dollarization from a macroeconomic viewpoint, additional research should focus on how dollarization has affected various socioeconomic classes in these societies on a more microeconomic level.
RightsThis publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.
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