Dollar, American

In an attempt to reduce runaway inflation, the Ecuadorian government froze citizens' checking and savings accounts for a year in March 1999. Nevertheless, Ecuador still experienced hyperinflation later that year. On January 9, 2000, Ecuador established dollarization as a desperate attempt to restore confidence in the economy. In order to test for dollarization's impact on economic growth, I employ an econometrics model with total factor productivity as the dependent variable. I then use dollarization as the independent variable of interest, and other control variables such as oil, and trade. The results reported in this paper suggest that dollarization has a significant positive impact on Ecuador's economic growth.