Monetary policy: effects of the decrease of the interest rates of the Federal Reserve in dollarized economies (USA, Ecuador, El Salvador and Panama)

Abstract

This research estimates the effect of the expansive monetary policy on the Federal Reserve in the economic growth and inflation in the countries which have dollarized economies. In order to evaluate the effects of the monetary policy, the data of the Mundial Bank are used (2019) for the United States, Ecuador, El Salvador and Panama; and the data of the Federal Reserve Bank of the United States of North America (2019), during 2001-2017 and the econometric strategy of panel data with fixed effects and individual effects. The results show that the application of the expansive monetary policy fulfills the aim of dynamization the economic growth after the Major Recession, whilst, it has no significant effect on the inflation of the economies that are being studied, also indicated that the formation of fixed capital is the determinant factor of growth of those countries.