Nicolás Cachanosky

  One of Argentina’s most frequently raised objections to dollarization is the immediate concern of a potential bank run. If deposits were to be dollarized without a sufficient reserve of actual dollars, people would rush to withdraw their dollars from banks, precipitating a run. This fear is particularly concerning given Argentina’s current economic situation, where […]

A big and embarrassing challenge to DSGE models (Dynamic Stochastic General Equilibrium) is Alex Tabarrok’s latest post at Marginal Revolution. Tabarrok comments on a paper that finds two problems with new-Keynesian DSGE modeling. One is that this model/technique cannot predict real-world data very well. Put differently, when we ask DSGE not to forecast but to […]

The original version of this post is co-authored with Emilio Ocampo. In 1976, the renowned economist Robert Lucas (1937-2023) introduced a thought-provoking paper that reshaped economic analysis. Lucas argued against relying solely on historical data to predict the outcomes of changes in economic policy, particularly when dealing with aggregate variables like consumption and investment. According to […]

  Alfredo Arízaga, who served as the Minister of Finance during Ecuador’s dollarization, offers insights on a key topic discussed in former President Jamil Mahuad’s book, “Así dolarizamos Ecuador” (translated as “How We Dollarized Ecuador”). Some have questioned whether dollarization was simply a response to the economic crisis of 1999. Arízaga firmly believes it was […]

Abstract In this paper, I discuss the benefits and dangers of dollarization. Dollarization is not only a way to control inflation with chronic monetary imbalances; it is fundamentally an institutional reform that contributes (in the margin) to checking the amount of government spending. Conversely, a poor design of a dollarization reform can facilitate the government […]