Nacionales (ingles)
The proliferation of controls did not prevent Argentines from seeking to protect their savings by sending them abroad or to the mattress. Reversing this State’s sterile persecutory attitude is a necessary first step for those savings to have a better destiny. Also necessary is to improve controls over criminals.
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The decision to lower tariffs on the import of cell phones and household appliances benefits millions of consumers. It has a low impact on total employment, but is very high in Tierra del Fuego. To facilitate its implementation, it is essential to have a reconversion strategy involving the Nation and the province.
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The exchange rate appreciation set the urgency to address the severe competitiveness problems suffered by domestic production. An essential step is to go forward with a tax reform eliminating the provincial and municipal sales tax. The best way to do it is to absorb both taxes with a “super-VAT”. (more…)
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Disability assistance operates under a complex set of rules that promise many benefits without contemplating how to finance them. The adjustment occurs by updating the price list of benefits below inflation. The main consequence is that many disabled people are left without coverage. (more…)
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In the context of productive stagnation, high inflation caused a strong reduction in real wages, which allowed maintaining the level of employment. In the new scenario of stability, if no progress is made with economic structural reforms, the adjustment will inevitably affect the level of employment. (more…)
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The exchange rate’s proximity to the band’s floor reduces its inflationary impact but maintains competitiveness problems. Since it is very difficult to lower taxes without affecting the fiscal balance, the solution is to replace taxes that erode competitiveness with taxes that do not.
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Exchange rate easing is a sensible response to currency appreciation. It is likely to have a negative, but controlled, impact on the disinflation process and recovery of production and incomes. Nevertheless, the weakest aspect of the announcements is the scant references to the structural reforms of the May Act.
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The direct impact of Trump’s protectionist measures on Argentina is limited. However, the indirect effects can be very negative. The best strategy is not to copy protectionism but to deepen reforms, including the free trade agreement with the European Union.
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Probably the main obstacle to the signing of the IMF’s agreement is the government’s reluctance to modify the exchange rate regime due to the impact it could have on inflation. The way to reconcile positions is with a shock of structural reforms as proposed in the May Agenda by Argentina’s government.
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The unemployment rate remained relatively stable, but this is due to lower quality jobs than to job growth. This fact shows that the most important thing is to speed up the structural reforms. In the case of jobs, it means the modernization of labor institutions.
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