Template-Type: ReDIF-Paper 1.0
Title: Financial Dollarization in Emerging Markets: Efficient Risk Sharing or Prescription for Disaster?
Author-Name: Lawrence Christiano
Author-Email: 
Author-Name: Husnu Dalgic
Author-Email: 
Author-Name: Armen Nurbekyan
Author-Email: 

Classification-JEL: 
Keywords: 

Abstract: We present data that suggests financial dollarization is primarily a device for
reallocating business cycle income risk between different people within emerging
market economies, rather than across different countries. Although we identify
sources of fragility in some aspects of dollarization, the common view that financial
dollarization is a source of fragility is over-stated. We develop a simple
model which formalizes the insurance view, which is consistent with the key crosscountry
facts on interest rate differentials, deposit dollarization and exchange rate
depreciations in recessions.

Note: 
Length: 125
Creation-Date: 2021-08
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp306
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2021_306