Quarantine macroeconomics
Keywords:
Quarantine; Coronavirus; Public deficit; Essential consumption; Exchange pressuresAbstract
Macroeconomics during quarantine as a defense strategy against the coronavirus pandemic is characterized by paralysis of production in the non-essential sectors. Meanwhile, the State subsidizes a percentage of the population so that it can sustain its essential consumption. A series of macroeconomic imbalances arise from there that aggravate the deficit of the public accounts, increase the injection of primary liquidity, and can cause certain exchange rate tensions. Conversely, the recession reduces imports and bank money creation, dampening tensions on the exchange market. In this work, a simple model is developed to expose the macroeconomic challenges introduced by the quarantine in the Argentine case, and a series of recommendations are presented to address possible exchange pressures. The analysis is extended to analyze the central bank's balance sheet and long-term external stability.
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Copyright (c) 2021 Andrés Pablo Asiain
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