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13:00 | Macro Research Seminar | ONLINE
University of Mannheim, Germany
https://cuni-cz.zoom.us/j/93386924934?pwd=ckhya1hhZmJuK3NSS1RkOFlrbHpodz09
Meeting ID: 933 8692 4934
Passcode: 195486
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Authors: Lawrence Christiano, Husnu Dalgic, Armen Nurbekyan
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.
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Full Text: Financial Dollarization in Emerging Markets: Efficient Risk Sharing or Prescription for Disaster?
