Synchronization of economic activity between dollarized economies and the United States: the cases of Ecuador and El Salvador

• María de Lourdes Rodríguez-Espinosa ^[1] ; Ramón A. Castillo-Ponce ^[2]
  1. [1] Universidad Tecnológica de la Mixteca

     Universidad Tecnológica de la Mixteca

     México

     
  2. [2] State University Drive, Los Angeles
• Localización: Applied econometrics and international development, ISSN 1578-4487, Vol. 17, Nº. 1, 2017, págs. 89-100
• Idioma: inglés
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• Resumen

  • We evaluate a possible consequence of dollarization: the synchronization of economic activity. The analysis considers the cases of Ecuador and El Salvador; both adopted the US dollar. The results of common cycles and cointegration tests suggest the existence of a common trend and a common cycle between the GDPs of Ecuador and the US after dollarization. For the case of El Salvador, a common trend was identified after dollarization but not before; no common cycles are evident in either period. We conclude that dollarization is associated with increased economic integration between the adopting countries and the US; as suggested by economic theory