Please use this identifier to cite or link to this item: http://hdl.handle.net/2445/107187
Title: Pass-through in dollarized countries: should Ecuador abandon the US dollar?
Author: Marí del Cristo, María Lorena
Gómez-Puig, Marta
Keywords: Finances internacionals
Dòlar nord-americà
Mercat financer
Màrqueting de relacions
Equador
International finance
American dollar
Financial market
Relationship marketing
Ecuador
Issue Date: 2013
Publisher: Taylor and Francis
Abstract: In this article, we examine the convenience of dollarization for Ecuador today. As Ecuador is strongly integrated financially and commercially with the United States, the exchange rate pass-through should be zero. However, we sustain that rising rates of imports from trade partners other than the United States and subsequent real effective exchange rate depreciations are causing the pass-through to move away from zero. Here, in the framework of the Vector Error Correction Model, we analyse the impulse response function and variance decomposition of the inflation variable. We show that the developing economy of Ecuador is importing inflation from its main trading partners, most of them emerging countries with appreciated currencies. We argue that if Ecuador recovered both its monetary and exchange rate instruments, it would be able to fight against inflation. We believe such an analysis could be extended to other countries with pegged exchange rate regimes.
Note: Versió postprint del document publicat a: https://doi.org/10.1080/00036846.2013.786166
It is part of: Applied Economics, 2013, vol. 45, num. 31, p. 4395-4411
Related resource: https://doi.org/10.1080/00036846.2013.786166
URI: http://hdl.handle.net/2445/107187
ISSN: 0003-6846
Appears in Collections:Articles publicats en revistes (Economia)

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