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Dollatization to the Rescue? A Study of Currency Area Theory Applied to Ecuadirian Dollarization

Permanent Link: http://ncf.sobek.ufl.edu/NCFE003681/00001

Material Information

Title: Dollatization to the Rescue? A Study of Currency Area Theory Applied to Ecuadirian Dollarization
Physical Description: Book
Language: English
Creator: Pati�o Vega, Oswaldo Javier
Publisher: New College of Florida
Place of Publication: Sarasota, Fla.
Creation Date: 2006
Publication Date: 2006

Subjects

Subjects / Keywords: Dollarization
Ecuador
Currency Areas
Currency Adoption
Genre: bibliography   ( marcgt )
theses   ( marcgt )
government publication (state, provincial, terriorial, dependent)   ( marcgt )
born-digital   ( sobekcm )
Electronic Thesis or Dissertation

Notes

Abstract: This thesis constitutes a critique of dollarization taking into consideration Ecuador's experience. Several negative internal and external shocks to the Ecuadorian economy led to the financial crisis of 1998-99. This crisis left Ecuador with no alternative except to pursue the alternative of currency adoption. Thus, in the case of Ecuador, dollarization fulfilled two purposes: promoting trade (consistent with currency area theory) and establishing macroeconomic discipline (an additional advantage of a currency area). First, I examine Ecuador�s economic situation from 1994 to 2000. This period is highlighted to explain the reasoning behind the adoption of the dollar. The theory of optimum currency areas is used to describe the theoretical underpinnings of dollarization as applied to a country such as Ecuador. Then, I concentrate on the five years that followed dollarization to obtain a better picture of the effects of currency adoption in the Ecuadorian economy. Finally, everything in the thesis is drawn together to develop a critique of the dollarization of the Ecuadorian economy. I address five distinctive questions: Did dollarization fail?, Was the dollar the best choice?, Is the euro possible today?, A common currency for MERCOSUR?, and Return to the sucre? Currency adoption was a necessary choice both to combat the reckless monetary and fiscal policies of the Ecuadorian economy and to help it recuperate from the external shocks suffered between 1994 and 1999. The primary advantage of dollarization was the higher confidence in the economy, which led to lower inflation, lower interest rates, increased trade, and greater fiscal transparency. However, Ecuador is still plagued by political instability and lack of technological and institutional efficiency. Therefore, dollarization was a necessary, but not a sufficient measure to attain steady and sound economic well being.
Statement of Responsibility: by Oswaldo Javier Pati�o Vega
Thesis: Thesis (B.A.) -- New College of Florida, 2006
Electronic Access: RESTRICTED TO NCF STUDENTS, STAFF, FACULTY, AND ON-CAMPUS USE
Bibliography: Includes bibliographical references.
Source of Description: This bibliographic record is available under the Creative Commons CC0 public domain dedication. The New College of Florida, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.
Local: Faculty Sponsor: Elliott, Catherine

Record Information

Source Institution: New College of Florida
Holding Location: New College of Florida
Rights Management: Applicable rights reserved.
Classification: local - S.T. 2006 P2
System ID: NCFE003681:00001

Permanent Link: http://ncf.sobek.ufl.edu/NCFE003681/00001

Material Information

Title: Dollatization to the Rescue? A Study of Currency Area Theory Applied to Ecuadirian Dollarization
Physical Description: Book
Language: English
Creator: Pati�o Vega, Oswaldo Javier
Publisher: New College of Florida
Place of Publication: Sarasota, Fla.
Creation Date: 2006
Publication Date: 2006

Subjects

Subjects / Keywords: Dollarization
Ecuador
Currency Areas
Currency Adoption
Genre: bibliography   ( marcgt )
theses   ( marcgt )
government publication (state, provincial, terriorial, dependent)   ( marcgt )
born-digital   ( sobekcm )
Electronic Thesis or Dissertation

Notes

Abstract: This thesis constitutes a critique of dollarization taking into consideration Ecuador's experience. Several negative internal and external shocks to the Ecuadorian economy led to the financial crisis of 1998-99. This crisis left Ecuador with no alternative except to pursue the alternative of currency adoption. Thus, in the case of Ecuador, dollarization fulfilled two purposes: promoting trade (consistent with currency area theory) and establishing macroeconomic discipline (an additional advantage of a currency area). First, I examine Ecuador�s economic situation from 1994 to 2000. This period is highlighted to explain the reasoning behind the adoption of the dollar. The theory of optimum currency areas is used to describe the theoretical underpinnings of dollarization as applied to a country such as Ecuador. Then, I concentrate on the five years that followed dollarization to obtain a better picture of the effects of currency adoption in the Ecuadorian economy. Finally, everything in the thesis is drawn together to develop a critique of the dollarization of the Ecuadorian economy. I address five distinctive questions: Did dollarization fail?, Was the dollar the best choice?, Is the euro possible today?, A common currency for MERCOSUR?, and Return to the sucre? Currency adoption was a necessary choice both to combat the reckless monetary and fiscal policies of the Ecuadorian economy and to help it recuperate from the external shocks suffered between 1994 and 1999. The primary advantage of dollarization was the higher confidence in the economy, which led to lower inflation, lower interest rates, increased trade, and greater fiscal transparency. However, Ecuador is still plagued by political instability and lack of technological and institutional efficiency. Therefore, dollarization was a necessary, but not a sufficient measure to attain steady and sound economic well being.
Statement of Responsibility: by Oswaldo Javier Pati�o Vega
Thesis: Thesis (B.A.) -- New College of Florida, 2006
Electronic Access: RESTRICTED TO NCF STUDENTS, STAFF, FACULTY, AND ON-CAMPUS USE
Bibliography: Includes bibliographical references.
Source of Description: This bibliographic record is available under the Creative Commons CC0 public domain dedication. The New College of Florida, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.
Local: Faculty Sponsor: Elliott, Catherine

Record Information

Source Institution: New College of Florida
Holding Location: New College of Florida
Rights Management: Applicable rights reserved.
Classification: local - S.T. 2006 P2
System ID: NCFE003681:00001

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