Argument: Trade integration with the US through dollarization may be harmful

Issue Report: Dollarization

Supporting Evidence

  • Michael W. Klein, “Dollarization and Trade” Fletcher School of Law and Diplomacy, Tufts University and N.B.E.R.March 15, 2002 – “In this paper we show that this result is not robust if we consider bilateral United States trade (even though the United States accounts for 60 percent of all observations of currency unions between industrial and non-industrial countries), nor if we consider bilateral trade of countries that have adopted the United States dollar, like Panama. Furthermore, the effect of dollarization on trade with the United States is not statistically distinct from the effect of a fixed dollar exchange rate on trade with the United States.”