Domestic price dollarization in emerging economies

This paper studies the dollarization of prices in retail markets emerging economies. We develop a model firm’s optimal currency choice inflationary derive theoretical predictions regarding optimality dollar pricing, and test them using data from largest e-trade platform Latin America. Across countries, price is positively correlated with asset inflation, negatively exchange rate volatility. At micro level, larger sellers are more likely to dollars, tradeable goods be posted dollars. then show that determines short-run reaction both quantities nominal shock.