Re: Re: RE: Re: Dollarize This
Jim, Correct me if I am wrong, but is dollarization any different from in the EMU with fixed exchange rates for the small countries? Paul Date sent: Tue, 18 Apr 2000 12:57:54 -0700 To: [EMAIL PROTECTED] From: Jim Devine <[EMAIL PROTECTED]> Subject:[PEN-L:18246] Re: RE: Re: Dollarize This Send reply to: [EMAIL PROTECTED] > talking a break... > > >CB: What's important about dollarization ? > > quoth Max: > > >That's what I was hoping others could tell me. > > > >Off the top of my head, it would seem to have dire implications for the > >independence of other countries and the adequacy of their money supply, > >from the standpoint of employment and investment. > > if by "dollarization" you mean the case of Argentina hooking its currency > irrevocably to the US$, what it means is that Alan Greenspan will do their > monetary policy. If they're in a recession and Saint Alan decides to hike > interest rates, cry for me Argentina! They'd also suffer (or benefit) from > the US fiscal stance. > > It's like the long period of slow growth in California that preceded the > last few years of boom. California couldn't use monetary (or fiscal) policy > to try to catch up with the rest of the US. > > Of course, Argentina could secede from the dollar more easily than > California could. > > Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~jdevine >
Re: Re: RE: Re: Dollarize This
Widespread dollarization, would have a similar effect as a fixed exchange rate, such as the gold standard or Bretton Woods. Except that the degree of fixity would be much greater. (much less opportunity to cheat). And as such it would have the advantages and disadvantages of a fixed exchange rate. Rod Jim Devine wrote: > talking a break... > > >CB: What's important about dollarization ? > > quoth Max: > > >That's what I was hoping others could tell me. > > > >Off the top of my head, it would seem to have dire implications for the > >independence of other countries and the adequacy of their money supply, > >from the standpoint of employment and investment. > > if by "dollarization" you mean the case of Argentina hooking its currency > irrevocably to the US$, what it means is that Alan Greenspan will do their > monetary policy. If they're in a recession and Saint Alan decides to hike > interest rates, cry for me Argentina! They'd also suffer (or benefit) from > the US fiscal stance. > > It's like the long period of slow growth in California that preceded the > last few years of boom. California couldn't use monetary (or fiscal) policy > to try to catch up with the rest of the US. > > Of course, Argentina could secede from the dollar more easily than > California could. > > Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~jdevine -- Rod Hay [EMAIL PROTECTED] The History of Economic Thought Archive http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/index.html Batoche Books http://Batoche.co-ltd.net/ 52 Eby Street South Kitchener, Ontario N2G 3L1 Canada
