A balanced account of the “Argentine Miracle”
November 7, 2011
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This Vox article by professor Yeyati gives a quick and balanced review of the situation in Argentine now. The country has been hailed by some (Krugman among others) as a model for how to deal with excessive international debt. While others have noted the pariah status Argentine received after defaulting on its debt in 2002. The fact is that Argentine has fared rather well after that default, pursuing a social oriented economic policy with a pro-growth focus. Increased tax income funded the government`s flagship income policies (a universal child allowance and the extension of social security coverage) as well as important budgetary increases in education and scientific research – all of them with significant political dividends. After the latest election, where the incumbent president Cristina Kirchner won by a large margin, the country is facing some big challenges ahead. High inflation, slower export markets and lower tax revenues could create problems ahead. But, as the article notes, the starting situation is not that bad, so may be Argentine can remain a model case after all?