Graduation Year

2020

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Sean Flynn

Reader 2

Nayana Bose

Terms of Use & License Information

Terms of Use for work posted in Scholarship@Claremont.

Rights Information

2019 Sreileak Hour

Abstract

Cambodia became a highly dollarized economy in 1993, and recently, the government started promoting the use of the domestic currency the Riel. This campaign brought the discussion on how (de-) dollarization could affect the country's macroeconomic stability. Laos, which is another emerging market and one of the highly dollarized economies in Southeast Asia, that shares many characteristics with Cambodia, has started dollarizing since 1997, but then turned into de-dollarization in 2008. This thesis analyzes the relationship between the degree of dollarization and macroeconomic stability of Laos, and how this analysis would be helpful for Cambodia in terms of their decision on cutting back of the US dollar using Laos' experience as an example. My study shows that the inflation rate goes side by side with the degree of dollarization and broad money growth rate for Laos. However, the negative relationship between unemployment and inflation is not as strong as the other two indicators. Although the result does not necessarily imply a causal relationship between inflation rate and the degree of dollarization, it indicates that Laos has successfully de-dollarized without facing economic volatility, which was experienced by a number of countries, such as Bolivia and Peru. This study should motivate Cambodia's policymakers to look deeper into Laos' de-dollarization policy and economic performance thereafter to figure out what they would have done right.

Download

This thesis is restricted to the Claremont Colleges current faculty, students, and staff.

Share

COinS