Playing Monopoly with the Devil: Dollarization and Domestic Currencies in Developing Countries

Playing Monopoly with the Devil: Dollarization and Domestic Currencies in Developing Countries

by Manuel Hinds
ISBN-10:
0300113307
ISBN-13:
9780300113303
Pub. Date:
10/10/2006
Publisher:
Yale University Press

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Overview

Playing Monopoly with the Devil: Dollarization and Domestic Currencies in Developing Countries

Why should a developing country surrender its power to create money by adopting an international currency as its own? This comprehensive book explores the currency problems that developing countries face and offers sound, practical advice for policy makers on how to deal with them. Manuel Hinds, who has extensive experience in real-world economic policy making, challenges the myths that surround domestic currencies and shows the clear rationality for dollarization or the use of a standard international currency.
The book opens with an entertaining story of the Devil, who, through a series of common macroeconomic maneuvers, coaches the president of a mythical country into financial ruin. This ruler’s path is not unlike that taken in several real developing countries, to their detriment. Hinds goes on to introduce new ways of thinking about financial systems and monetary behavior in Third World countries.

Product Details

ISBN-13: 9780300113303
Publisher: Yale University Press
Publication date: 10/10/2006
Series: Council on Foreign Relations Book Series
Pages: 304
Product dimensions: 6.13(w) x 9.25(h) x (d)

Table of Contents

Contents

Acknowledgments....................xi
Prologue: Playing Monopoly with the Devil....................xiii
Introduction....................xxv
Part One. The Unfulfilled Promises of Local Currencies 1 The Standard of Value and the Reversed Liquidity Trap....................3
2 The Unfulfilled Promises in the Financial System....................16
3 The Unfulfilled Promises in Trade and Growth....................53
4 The Costs of Stability....................82
5 Missing Financial Globalization....................107
Part Two. The Reversed Liquidity Trap and Financial Crises 6 The Financial Risks of Monetary Regimes....................121
7 The Currency Origins of Financial Crises....................136
8 The Myth of the Lender of Last Resort....................167
9 The Solution of Crises and the Aftermath....................179
10 The Counterfactuals....................189
Part Three. The Optimal Currency Area and the Choice of Currency 11 The Conventional Optimal Currency Area Theory....................197
12 Toward a Redefinition of an Optimal Currency Area....................220
13 Conclusions....................232
Epilogue: Werner von Bankrupt on the Art of Buying Countries with a Buck-Fifty....................235
Notes....................245
Index....................249

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