Re: Dollarization -- Moore's argument

[Colin Danby <danbyc@xxxxxxx>]

Matias:

The gold standard is an interesting parallel because in theory it gave
you an international currency and automatic adjustment -- I wonder if
that's the sense in which Basil means no BoP problems.

My favorite book on this is

Ford, A.G. 1962. The Gold Standard 1880-1914: Britain and Argentina.
Oxford: Clarendon Press.

Can you recommend other work on gold-standard peripheral adjustment?
There's an early Prebisch work I have to track down.

I would suggest that "country risk" is a description (often just,
tautologically, the name for the interest rate spread) but not an
explanation.

Best, Colin


PS: FWIW I tried to touch on some of these issues in
http://csf.colorado.edu/pkt/seminars/sep97sem.html

> precisely because country risk still exists, balance of payments
> problems
> do not disappear.  capital flows may go in the wrong direction. that
> is, a
> dollarized country with a current account deficit may face capital
> outflows.
> in the absence of the devaluation alternative, contraction would be
the
>
> only mechanism to reduce the current account deficit.  that is the
> sort
> of bp adjustment of peripheral countries during the gold standard.
> matias