Introducing the Euro as Legal Tender—Benefits and Costs of Eurorization for Cape Verde / Patrick Imam.

Format:

Book

Government document

Author/Creator:

Imam, Patrick.

Contributor:

International Monetary Fund.

Series:

IMF Working Papers; Working Paper ; No. 2009/146

IMF Working Papers

Language:

English

Subjects (All):

Euro-dollar market.

Foreign exchange rates--Cape Verde.

Foreign exchange rates.

Physical Description:

1 online resource (36 p.)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2009.

Language Note:

English

Summary:

In recent years, recommendations for countries to unilaterally dollarize/eurorize have become common, particularly when the countries lack economic credibility. After exploring the characteristics of dollarizing/eurorizing economies, we look at the merits and costs of unilateral eurorization for Cape Verde, a highly tourism based economy that has become increasingly integrated into the euro-zone area and that has a strong macroeconomic track record. We illustrate that neither the benefits nor the costs of unilateral eurorization are large and conclude that there is no compelling case to change the current exchange rate arrangement at this point in time. Econometrically, we assess the characteristics of dollarized economies and demonstrate that few of them apply to Cape Verde, further confirming that Cape Verde does not fit the pattern of most dollarizing countries.

Contents:

Contents; I. Introduction; II. Characteristics of Eurorization/Dollarization Countries; Tables; 1. List of Dollarized Economies; III. Potential Benefits and Costs of Eurorization for Cape Verde; Boxes; 1. Loss of Seignorage Revenue: Theory and Evidence; 2. Present Value Loss of Seignorage Revenue (as a share of GDP); Figures; 1. Debt With and Without Access to Seignorage Revenue, 2008-28; 3. Seignorage Gains for CEECs; 2. Growth Effect of Euroriztion is Temporary, not Permanent; IV. Econometric Analysis of the Characteristics of Dollarized Economies; A. Determinants of Exchange Rate Choice

4. Comparing Merits of Different Fixed Exchange Rate Regimes with Cape Verde Current PegB. Data; C. Estimation; 5. Choice of Exchange Rate Regime (Dollarized Economies); 6. Choice of Exchange Rate Regime (Hard Pegs); 7. Choice of Exchange Rate Regime (Dollarized, Other Hard Pegs and Non-Hard Pegs); V. Practical Aspects of Successful Eurorization; 2. Some Practical Aspects of Introducing the Euro; VI. Conclusion; References; Appendix; 1. History of Cape Verdean Exchange Rate Arrangements

Notes:

Description based upon print version of record.

Includes bibliographical references.

Description based on print version record.

ISBN:

9786612843600

9781462306329

1462306322

9781452790428

1452790426

9781282843608

1282843605

9781451872934

1451872933

OCLC:

642055052