Does it make sense to dollarize Argentina?


Dollarization of Argentina from an economic perspective

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After fifty years of five currency changes, an accumulated devaluation of thirteen zeros, three defaults, and a hyperinflationary period, the ultraliberal economist and presidential candidate Javier Milei has focused his attention on dollarization as a central piece of his electoral proposals. This paper addresses, from a purely economic perspective, the evaluation of the feasibility of this measure and its possible consequences. After defining the concept of dollarization, the study analyzes the Argentine monetary experiment known as “Ley de Convertibilidad”, which shared some similarities with dollarization. Subsequently, through numerical estimations based on logical reasoning, the different possibilities of exchange rates are explored, a fundamental aspect for the viability of the proposal. The focus then shifts to the exploration of the advantages and disadvantages of possible dollarization, to end with an analysis of the results of dollarization in Ecuador, a case close to Argentina. Finally, conclusions will be drawn.

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