Dollarization and Macroeconomic Stability: Lessons from Argentina, Ecuador, and Lebanon

This paper compares the experiences of Argentina, Ecuador, and Lebanon with dollarization as a response to monetary instability. Using historical analysis and regression results, it evaluates how full, partial, or de facto dollarization impacted inflation control, economic stability, and institutional resilience. Ecuador’s full dollarization in 2000 stabilized prices and reduced volatility, while Argentina’s hard peg without full commitment led to recurring crises. Lebanon’s unofficial dollarization collapsed amid financial mismanagement and loss of confidence. The study concludes that while dollarization can curb inflation, its success depends on credible governance and structural reforms; partial or unmanaged approaches can amplify economic fragility.