Eduardo Levy Yeyati

Universidad Torcuato Di Tella
Escuela de Economia Empresarial
Minones 2177 (1428) Buenos Aires
Tel: 5411 4787-9349
Fax: 5411 47833220

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NBER Working Papers and Publications

June 2006Liquidity Insurance in a Financially Dollarized Economy
Unlike the financial dollarization (FD) of external liabilities, the dollarization of domestic financial assets (domestic FD) has received comparatively less attention until very recently, when it has been increasingly seen as a key source of balance sheet exposure. This paper focuses on a complementary %u2013and often overlooked%u2013 angle of domestic FD: the limit it imposes on the central bank as domestic lender of last resort, and the resulting exposure to dollar liquidity runs. The paper discusses the incidence of FD on banking crisis propensity, shows that FD has been an important motive for self insurance in the form of international reserves, and highlights the moral hazard associated with centralized reserve accumulation. Next, it illustrates the authorities%u2019 belated recours...

Published: Liquidity Insurance in a Financially Dollarized Economy, Eduardo Levy Yeyati. in Financial Markets Volatility and Performance in Emerging Markets, Edwards and Garcia. 2008

July 2003Flexible Exchange Rates as Shock Absorbers
with Sebastian Edwards: w9867
In this paper we analyze empirically the effect of terms of trade shocks on economic performance under alternative exchange rate regimes. We are particularly interested in investigating whether terms of trade disturbances have a smaller effect on growth in countries with a flexible exchange rate regime, than in countries with a more rigid exchange rate arrangement. We also analyze whether negative and positive terms of trade shocks have asymmetric effects on growth, and whether the magnitude of these asymmetries depends on the exchange rate regime. We find evidence suggesting that terms of trade shocks get amplified in countries that have more rigid exchange rate regimes. We also find evidence of an asymmetric response to terms of trade shocks: the output response is larger for negative th...

Published: Edwards, Sebastian and Eduardo Levy Yeyati. "Flexible Exchange Rates As Shock Absorbers," European Economic Review, 2005, v49(8,Nov), 2079-2105. citation courtesy of

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