Fighting Inflation Within the Dollarization Context: The Case of Vietnam

Michaël Goujon (1)

1 CERDI - Centre d'Études et de Recherches sur le Développement International

During the transition towards a market economy, the Vietnamese economy has embarked upon a path of lasting disinflation in a context of dollarization. In this study, a model shedding light on the determinants of inflation in the case of dollarization is developed and estimated with a two-step procedure for Vietnam in the 1990s. In particular, the results of this research reveal the impact on inflation of the exchange rate variations and a measure of the excess of broad money. Then, managing the exchange rate fluctuations and avoiding any excess of broadly defined money are found to be essential. The adoption of these two strategies by Vietnamese authorities may be a significant explanation of their ability to fight inflation.

Mots clés: Vietnam; cointegration; Dollarization; Demand for Money; inflation

Domaines: Economies et finances

Michaël Goujon. Fighting Inflation Within the Dollarization Context: The Case of Vietnam. 2011. ⟨halshs-00564687⟩