Panama, Ecuador, and El Salvador began using the U.S. dollar as their domestic currency in 1904, 2000, and 2001, respectively. How do you expect their inflation rates to compare with U.S. inflation? Plot since 1960 the percent change from a year ago of consumer prices in Panama (FRED code: DDOE02PAA086NWDB), Ecuador (FRED code: DDOE02ECA086NWDB), El Salvador (FRED code: DDOE01SVA086NWDB) and the United States (FRED code: PCEPI). Download these data and (starting with the country’s date of dollarization), compare the average inflation rate in each country with U.S. inflation.
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