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Five years of competitive and stable real exchange rate in Argentina, 2002-2007

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  • Roberto Frenkel
  • Martin Rapetti

Abstract

We argue that the macroeconomic regime focused on the preservation of a stable and competitive real exchange rate (SCRER) has been a key factor explaining the rapid growth experienced in Argentina during 2002-2007. This policy promoted economic growth not only by preserving external and fiscal accounts sustainability, but also by providing incentives to the tradable sector and thus encouraging the expansion of its production, employment and investment. Monetary and exchange rate policies aimed at preserving a SCRER collide with conventional wisdom, particularly with the open economy trilemma. We argue that the critiques based on the trilemma may fail to hold in situations of excess supply of foreign currency and analyze the conditions under which the SCRER policy is sustainable.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

Volume (Year): 22 (2008)
Issue (Month): 2 ()
Pages: 215-226

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Handle: RePEc:taf:irapec:v:22:y:2008:i:2:p:215-226

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Related research

Keywords: real exchange rate; growth; monetary policy; trilemma; Argentina;

References

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  1. Prasad, Eswar & Rajan, Raghuram G. & Subramanian, Arvind, 2007. "Foreign Capital and Economic Growth," IZA Discussion Papers 3186, Institute for the Study of Labor (IZA).
  2. Mario DAMÄ°LL & Martin RAPETTÄ° & Roberto FRENKEL, 2005. "The Argentinean debt: History, default and restructuring," Iktisat Isletme ve Finans, Bilgesel Yayincilik, Bilgesel Yayincilik, vol. 20(236), pages 5-26.
  3. Polterovich, Victor & Popov, Vladimir, 2003. "Accumulation of Foreign Exchange Reserves and Long Term Growth," MPRA Paper 20069, University Library of Munich, Germany.
  4. Roberto Frenkel & Lance Taylor, 2006. "Real Exchange Rate, Monetary Policy and Employment," Working Papers, United Nations, Department of Economics and Social Affairs 19, United Nations, Department of Economics and Social Affairs.
  5. Alan M. Taylor & Mark Taylor, 2004. "The Purchasing Power Parity Debate," Working Papers 46, University of California, Davis, Department of Economics.
  6. Frenkel, Roberto & Ros, Jaime, 2006. "Unemployment and the real exchange rate in Latin America," World Development, Elsevier, vol. 34(4), pages 631-646, April.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Crying for Argentina, again?
    by Triplecrisis in Triple Crisis on 2013-06-13 14:17:47
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Cited by:
  1. Andrés Schneider, 2010. "Gross Substitutability of Financial Assets: Effects on Monetary Policy," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, Central Bank of Argentina, Economic Research Department, vol. 1(60), pages 105-136, October -.
  2. Ahmet Benlialper & Hasan Cömert, 2013. "Implicit Asymmetric Exchange Rate Peg under Inflation Targeting Regimes: The Case of Turkey," Working Papers, Turkish Economic Association 2013/11, Turkish Economic Association.
  3. Gerald Epstein & James Heintz & Léonce Ndikumana & Grace Chang, 2011. "Employment, Poverty and Economic Development in Madagascar," Published Studies, Political Economy Research Institute, University of Massachusetts at Amherst ndikumana_ilo2010, Political Economy Research Institute, University of Massachusetts at Amherst.
  4. Cornia, Giovanni Andrea, 2012. "Inequality Trends and their Determinants: Latin America over 1990-2011," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  5. Gerald Epstein, 2009. "Rethinking Monetary and Financial Policy: Practical suggestions for monitoring financial stability while generating employment and poverty reduction," Published Studies, Political Economy Research Institute, University of Massachusetts at Amherst ilo_epstein11_09, Political Economy Research Institute, University of Massachusetts at Amherst.
  6. Giovanni Andrea Cornia, 2012. "The New Structuralist Macroeconomics and Income Inequality," Working Papers - Economics wp2012_25.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  7. Jan Kregel, 2011. "Debtors' Crisis or Creditors' Crisis? Who Pays for the European Sovereign and Subprime Mortgage Losses?," Economics Public Policy Brief Archive ppb_121, Levy Economics Institute.
  8. Frenkel, Roberto & Rapetti, Martín, 2012. "Exchange rate regimes in the major Latin American countries since the 1950s: lessons from history," Revista de Historia Económica, Cambridge University Press, Cambridge University Press, vol. 30(01), pages 157-188, March.
  9. Giovanni Andrea Cornia & Bruno Martorano, 2013. "Development policies and income inequality in selected developing regions, 1980-2010," Working Papers - Economics wp2013_13.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  10. Giovanni Andrea Cornia & Bruno Martorano, 2010. "Policies for Reducing Income Inequality: Latin America During the Last Decade," Working papers, UNICEF,Division of Policy and Strategy 1006, UNICEF,Division of Policy and Strategy.
  11. Mario Cimoli & Wellington Pereira & Gabriel Porcile & Fábio Scatolin, 2011. "Structural change, technology, and economic growth: Brazil and the CIBS in a comparative perspective," Economic Change and Restructuring, Springer, Springer, vol. 44(1), pages 25-47, April.
  12. Roberto Frenkel & Martin Rapetti, 2010. "A Concise History of Exchange Rate Regimes in Latin America," UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics 2010-01, .
  13. Arslan Razmi & Martin Rapetti & Peter Skott, 2009. "The Real Exchange Rate as an Instrument of Development Policy," UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics 2009-07, .
  14. Giovanni Andrea Cornia, 2012. "Inequality Trends and their Determinants: Latin America over 1990-2010," Working Papers - Economics wp2012_02.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  15. Epstein, Gerald, 2009. "Rethinking monetary and financial policy : practical suggestions for monitoring financial stability while generating employment and poverty reduction," ILO Working Papers 434439, International Labour Organization.
  16. Ridha Nouira & Khalid Sekkat, 2010. "Desperately Seeking the Positive Impact of Undervaluation on Growth," Working Papers, Economic Research Forum 560, Economic Research Forum, revised Oct 2010.
  17. Ahmet Benlialper & Hasan Cömert, 2013. "Implicit Asymmetric Exchange Rate Peg under Inflation Targeting Regimes: The Case of Turkey," ERC Working Papers 1308, ERC - Economic Research Center, Middle East Technical University, revised Dec 2013.
  18. Epstein, Gerald & Heintz, James & Ndikumana, Léonce & Chang, Grace, 2010. "Employment, poverty and economic development in Madagascar : a macroeconomic framework," ILO Working Papers 455446, International Labour Organization.
  19. Ahmet Benlialper & Hasan Cömert, 2013. "Implicit Asymmetric Exchange Rate Peg under Inflation Targeting Regimes: The Case of Turkey," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp333, Political Economy Research Institute, University of Massachusetts at Amherst.

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