dollarization (was: imposing)

["Alan G. Isaac" <aisaac@xxxxxxxxxxxx>]

Hi Esteban,

I don't really have any strong disagreements with this.
Perhaps Panama could be described more optimistically:
Annual inflation has averaged 1.7 percent for the past 30
       years -- lower even than that of the U.S.
The economy was largely insulated from the Asian crisis of
       two years ago -- and has grown 4 percent annually since 1997.
Interest rates there are relatively low, persisently among the
       lowest in Latin America.
Government and private bank bonds are classified Ba1 or better.
No restrictions on buying foreing currency since the end of the gold
       standard.
etc.
You can find a discussion of some of this at
 http://wbln0018.worldbank.org/LAC/LACInfoClient.nsf/Date/By+Author_Country/188DE6B8142BB478852569540076F3D1?OpenDocument
and some more general discussion at
 http://users.erols.com/kurrency/bogdllr.htm

Alan

PS I guess picking a couple years of low growth doesn't seem
appropriate, given how long Panama has been dollarized.



On Fri, 20 Apr 2001, eperez wrote:
> El Salvador adopted dollarization under
> a law which is named "Monetary Integration Law"
> It provides an escape clause for the Central Bank
> under the guise of open market operations.
> The law can be found in english translation
> at Kurt Schuler's Web Site along with an
> extensive bibliography on currency boards
> and dollarization. The earthquake in El Salvador
> makes it very hard to judge the effects on dollarization so far.
> The current debate is on fiscal policy, the tool for economic stabilization}
> unbder dollarization.
> In Ecuador as in El Salvador the natinal currency still circulates
> (especially in the country side).
> Panama has not been exempted from typical
> Latin American maladies such as high external debt ratios
> (currently 50% of GDP), high fiscal deficits (in the 80's) and
> low growth.GDP growth per capita since 1995
> is below 1%. Panama is also the Latin American country
> which has had the biggest number of IMF adjustment
> programmes. Since 1996 the Current account as %
> of GDP reached 14% in 1998 (or 1999) and was at 9%
> for 2000.