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Article Dans Une Revue Journal of Comparative Economics Année : 2006

Fighting inflation in a dollarized economy: The case of Vietnam

Résumé

During its transition towards a market economy, Vietnam embarked upon a path of disinflation through dollarization. In this paper, we develop a model to shed light on the determinants of inflation under dollarization and estimate it for Vietnam in the 1990s using a two-step procedure. During this period, inflation was induced by exchange rate variations and by an excess of broad money. The paper shows that management of exchange rate fluctuations combined with a restrictive monetary policy based on broadly defined money was essential for the Vietnamese authorities to succeed in fighting inflation. Illustrative simulations based on the sharp 25% exchange rate depreciation of 1997 to 1998 suggest that this depreciation led to an additional cumulated inflation of 13% over the period.
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Dates et versions

hal-00116751 , version 1 (27-11-2006)

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  • HAL Id : hal-00116751 , version 1

Citer

Michaël Goujon. Fighting inflation in a dollarized economy: The case of Vietnam. Journal of Comparative Economics, 2006, Vol. 34, n° 3, pp.564-581. ⟨hal-00116751⟩
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