Dollarization in Ecuador: A review of macroeconomic results in the last two decades

Abstract

The objective of the present study was to review the advantages and disadvantages of dollarization in the Ecuadorian economy through a descriptive analysis of key macroeconomic indicators. The research design was non-experimental, longitudinal, and descriptive. Official sources were identified for the collection of economic indicators in the period 2000 to 2019. Growth rates, inflation, unemployment and indebtedness were analyzed, in addition to the balance of the trade balance and the public budget. The results showed that dollarization stabilizes prices by keeping inflation below one digit. However, Ecuador's economic growth can not be explained solely by this cause. It must be explained by other factors, especially the country's dependence on oil, which also translates into the need to make recurrent adjustments. It is concluded that dollarization demands compatible policies in accordance with severe fiscal discipline.