Domestic price dollarization in emerging economies

• 成果类型: Article
• 署名作者: Drenik, Andres; Perez, Diego J.
• 署名单位: Columbia University; New York University; National Bureau of Economic Research
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2021.07.002
• 发表日期: 2021
• 页码: 38-55
• 关键词: Currency choice; prices; dollar; Exchange rate; pass-through

摘要

This paper studies the dollarization of prices in retail markets of emerging economies. We develop a model of the firm's optimal currency choice in retail markets in inflationary economies. We derive theoretical predictions regarding the optimality of dollar pricing, and test them using data from the largest e-trade platform in Latin America. Across coun-tries, price dollarization is positively correlated with asset dollarization and inflation, and negatively correlated with exchange rate volatility. At the micro level, larger sellers are more likely to price in dollars, and more tradeable goods are more likely to be posted in dollars. We then show that the currency of prices determines the short-run reaction of both prices and quantities to a nominal exchange rate shock. (c) 2021 Elsevier B.V. All rights reserved.