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“The proposal of dollarization by Javier Milei represents a bold avenue for the nation. It offers the prospect of currency stability, which is vital given Argentina’s history of hyperinflation and devaluation. While relinquishing control over domestic monetary policy and economic dependence on the U.S. are key concerns, the case studies of Ecuador and El Salvador shed light on potential strategies for successful implementation.”Continue Reading

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Macroeconomic theory suggests that without any outside intervention, the macroeconomy will self-adjust and return to its long-run state after short-term shocks. The decision for policymakers thus boils down to a cost-benefit analysis taking into account factors like intertemporality and risk tolerance — they can either wait and allow the economy to adjust organically, or sink resources into actively trying to stabilize the economy, taking on the risk of further destabilizing it.Continue Reading