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Argument: Dollarization limits monetary policy flexibility

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Revision as of 05:12, 7 March 2008 (edit)
Brooks Lindsay (Talk | contribs)
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Current revision (20:18, 17 June 2010) (edit)
Lenkahabetinova (Talk | contribs)
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==Parent debate== ==Parent debate==
-*[[Debate:Dollarization]]+*[[Debate: Dollarization]]
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==Supporting evidence== ==Supporting evidence==
*[http://www.nytimes.com/2006/02/19/business/yourmoney/19view.html Daniel Gross. "The Case for Fewer but Stronger Currencies". New York Times. February 19, 2006] - "But one economist's reassuring stability can be another's troubling rigidity. If the price of coffee plummets or the price for textiles falls because of competition from China, a Latin American country that has dollarized won't have the option of cutting interest rates to stimulate growth. 'Dollarization takes away the option of depreciation,' Professor Hausman said." *[http://www.nytimes.com/2006/02/19/business/yourmoney/19view.html Daniel Gross. "The Case for Fewer but Stronger Currencies". New York Times. February 19, 2006] - "But one economist's reassuring stability can be another's troubling rigidity. If the price of coffee plummets or the price for textiles falls because of competition from China, a Latin American country that has dollarized won't have the option of cutting interest rates to stimulate growth. 'Dollarization takes away the option of depreciation,' Professor Hausman said."
*[http://www.dollarization.org/ “Basics of Dollarization”. Joint Economic Committee Staff Report July 1999. Updated January 2000] - "It has also been claimed that there is a cost of losing flexibility in monetary policy, such as when the issuing country is tightening monetary policy during a boom while an officially dollarized country really needs looser monetary policy because it is in a recession. In a dollarized monetary system the national government cannot devalue the currency or finance budget deficits by creating inflation, because it does not issue the currency." *[http://www.dollarization.org/ “Basics of Dollarization”. Joint Economic Committee Staff Report July 1999. Updated January 2000] - "It has also been claimed that there is a cost of losing flexibility in monetary policy, such as when the issuing country is tightening monetary policy during a boom while an officially dollarized country really needs looser monetary policy because it is in a recession. In a dollarized monetary system the national government cannot devalue the currency or finance budget deficits by creating inflation, because it does not issue the currency."

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Parent debate

Supporting evidence

  • Daniel Gross. "The Case for Fewer but Stronger Currencies". New York Times. February 19, 2006 - "But one economist's reassuring stability can be another's troubling rigidity. If the price of coffee plummets or the price for textiles falls because of competition from China, a Latin American country that has dollarized won't have the option of cutting interest rates to stimulate growth. 'Dollarization takes away the option of depreciation,' Professor Hausman said."
  • “Basics of Dollarization”. Joint Economic Committee Staff Report July 1999. Updated January 2000 - "It has also been claimed that there is a cost of losing flexibility in monetary policy, such as when the issuing country is tightening monetary policy during a boom while an officially dollarized country really needs looser monetary policy because it is in a recession. In a dollarized monetary system the national government cannot devalue the currency or finance budget deficits by creating inflation, because it does not issue the currency."

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