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I'm not saying FdT is doing a good job, I'm saying they're implementing the policy that Macri would have if he hadn't capitulated on inflation targeting.
Possibly. I don't Argentina's economy too well, but it's a case where dollarization might be tough but necessary medicine.
It would probably fix inflation and i guess they’re all already using dollars, but I think even Milei said to dollarize he expected they’d have to liquidate 100% of central bank reserves, and other people seem to think even that wouldn’t be enough. I have to assume that would be pretty devastating (ie pensions disappearing overnight), and I’m not sure why they wouldn’t run into the same issues they did under convertibility. Then again maybe in the long run that’s better than where they’re at, idk.
They wouldn't. A lot of Argentina's problems are paying for a lack of credibility. For example, interest on government bonds includes not only default risk, but also the risk of high inflation. That would be reduced to a tiny fraction (just the risk of inflation by the US government) if they dollarized.
But yes, it would be a very costly undertaking in the short run.
What about competitiveness? My understanding is the main reason they abandoned convertibility was it way overvalued their currency for the region, hurting exports (at least after an initial burst) and employment, especially after everyone else’s currencies torpedoed in the crises of the 90s.
For large economies like Argentina, floating exchange rates are generally better, exactly for the reason you mention. (For smaller economies, a currency board system has a good record: no central bank, but keep enough reserves to maintain convertibility.) However, the discretion given by having their own currency has been a source for far more mischief than benefits from the Argentine government, and there is no reason to expect that to change.
By the way, in case you are wondering, Argentina did not have a proper currency board in the 1990s period: https://www.cato.org/sites/cato.org/files/articles/hanke_feb2008_argentina_currencyboard.pdf
Huh, very interesting. Whenever Argentina says it’s doing X or Y economic activity, in reality the actual application always seems to be very different than what would be normal. In the same vein they’re trying to raise interest rates, but while a normal country would be doing open market operations in recent history Argentina has practiced sterilization, with predictably less effective results and possibly even fueling inflation expectations.
Yes, I've even heard that their "Keynesian" recovery in the 2000s was accompanied by fiscal discipline and driven by expansionayr monetary policy, whereas even modern Keynesians would recommend at most fiscal neutrality in such circumstances AFAIK.
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