strategy will be a panacea that will help resolve hard
64. Argentina, Ministry of Economy, Secretariat of
problems such as fiscal dominance." However, they
Finance, Undersecretariat of Financing, "Main
give no examples of anybody who has claimed that
Macroeconomic Indicators," www.mecon.gov.ar/
any particular strategy is a panacea. Frederic S.
download/financiamiento/newinf.xls; and Ecua-
Mishkin and Miguel A. Savastano, "Monetary Policy
dor, Servicio de Rentas Internas, www.sri.gov.ec/
Strategies for Latin America," National Bureau of
download/pdf/estadisticas2002.pdf.
Economics Working Paper 7617, March 2000, p. 58,
www.nber.org.
65. As Guillermo Calvo suggested in remarks at
the conference "Euro and Dollarization,"
58. On some other ideas for reforming budgetary rela-
Fordham University Graduate Business School,
tions between the federal government and the
New York, April 6, 2002.
provinces, see Centro de Estudios Bonaerense, CEB
66. Robert O'Quinn and Nigel Ashford, "The Kiwi
(news) 2, no. 16 (April 2002), www.ceb.org.ar/ceb/
Effect: What Britain Can Learn from New Zealand,"
sec_publicaciones/downloads/ceb_news_ 04_02.pdf.
London, Adam Smith Institute, 1996, pp. 2830,
59. Information on government revenues and
www.adamsmith.org.uk/policy/publications/pdf-
spending can be found at the Website of the
files/kiwi-effect.pdf.
Ministry of Economy, Secretaría de Hacienda,
67. "There's no one, neither in Argentina, nor at the
www.mecon.gov.ar/hacienda. See especially the
IMF nor in any other place who has a quick fix for
Boletín Fiscal and the "Resultado de las Cuentas
a very, very complex situation." Quoted in Simon
del Sector Público No Financiero."
Gardner, "Argentina Wants Big Debt Cut, IMF
60. Notable exceptions have been Charles Calomiris
Sees No Quick Fix," Reuters, March 21, 2002.
and the economic consulting firms Polyconomics
and InterMarket Forecasting, which have warned of
68. The Instituto Ecuatoriano de Economía
the dangers of increasing tax rates in Argentina. See
Política translated two 1999 papers I wrote on dol-
www.polyconomics.com and www.intermarketfore-
larization in general ("Promoviendo la
casting.com. To see the IMF's surprise that higher
Dolarización Oficial in los Mercados Emergentes,"
tax rates did not increase revenue proportionally,
available over the Internet only, and
read its Argentina country reports at www.imf.org/
"Fundamentos de la Dolariza-ción," published as a
external/country/ARG/index.htm.
pamphlet). The institute also published a study I
wrote after dollarization was announced, suggest-
61. It is also important to remember that the tax
ing the particular form dollarization should take
rates that maximize economic growth are lower
("Dolarización Oficial en Ecuador"). See www.
than the rates that maximize government revenue.
his.com/~ieep/documen.htm. I first wrote on dol-
See Lawrence B. Lindsey, "Revenue Maximizing
larization in Ecuador in "Por qué el sucre no es tan
bueno como el dólar," El Financiero (Quayaquil),
Taxation Is Not Optimal," Report, Office of the
Chairman, Joint Economic Committee, U.S. Con-
May 4, 1998, p. 15, and I visited Ecuador in July
gress, July 1997, www.house.gov/jec/fiscal/tx-grwth/
1999 and January 2000 to give speeches on dollar-
lindsey/lindsey.pdf.
ization and discuss it with government officials
and local economists and businesspeople.
62. Daniel Altman, "Reviving Argentina: The Trouble
with Taxes," New York Times, January 1, 2002, p. C1.
69. Although I disagree with much of the IMF's
advice on tax and currency matters, some possible
63. On Ireland, see Fred McMahon, Roads to Growth:
economic reforms are discussed in IMF country
How Lagging Economies Become Prosperous (Halifax:
reports on Argentina, www.imf.org/external/
Atlantic Institute for Market Studies, 2000), chap. 2,
country/ARG/index.htm. World Bank documents
www.aims.ca/Publications/Growth/aimsch2.pdf.
on Argentina are available at www.worldbank.org.
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