Template-type: ReDIF-Paper 1.0
Author-Name: Sok Heng Lay
Author-Name-First: Sok
Author-Name-Last: Lay
Author-Workplace-Name: Exchange Department, National Bank of Cambodia
Author-Name: Makoto Kakinaka
Author-Name-First: Makoto
Author-Name-Last: Kakinaka
Author-Email: kakinaka@iuj.ac.jp
Author-Workplace-Name: International University of University
Author-Workplace-Homepage: http://www.iuj.ac.jp/
Author-Name: Koji Kotani
Author-Name-First: Koji
Author-Name-Last: Kotani
Author-Email: kkotani@iuj.ac.jp
Author-Workplace-Name: International University of University
Author-Workplace-Homepage: http://www.iuj.ac.jp/
Title: Exchange Rate Movements in a Dollarized Economy: The Case of Cambodia
Abstract: There has been an on-going debate on whether dollarization helps stabilize exchange rates for emerging economies. This paper discusses this issue in a highly dollarized country, Cambodia, by empirically examining the relationship between dollarization and exchange rate movements. The GARCH analysis suggests that dollarization induces the depreciation of the Cambodian riel as well as intensifies exchange rate variability. The result is consistent with the argument that dollarization is one of the crucial causes of exchange rate instability. Dollarization in Cambodia could be a constraint on poverty reduction since it tends to affect the living standard of the poor who earn the income in the riel through the depreciation of the currency and intensified volatility of exchange rates.
Classification-JEL: 
Length: 21 pages
Creation-Date: 2010-11
Number: EMS_2010_18
File-URL: https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2010_18.pdf
File-Format: Application/pdf
File-Function: First version, 2010
File-Size: 572KB
Keywords: dollarization, exchange rates, Cambodia
Handle: RePEc:iuj:wpaper:EMS_2010_18