International Borrowing and Macroeconomic Performance in Argentina
AbstractThis paper provides an overview of the major economic events in Argentina from the adoption of the convertibility plan in 1991 to the collapse of the exchange rate regime in 2001. We focus on the relationship between the credibility of the currency board and capital flows, and the inescapable link between fiscal and monetary policy. Argentina inadvertently entered into a vicious circle with financial markets -- one in which it felt compelled to raise the exit costs from the currency board in order to maintain the regime%u2019s credibility. As exit costs mounted, financial markets became increasingly concerned about the dire implications of a devaluation, which in turn, compelled the government to raise exit costs further. In the late 1990s, when Argentina went into recession, it required some sort of stimulus -- either a loosening of monetary policy (i.e. a devaluation) or fiscal stimulus. But either way spelled disaster. The added pressure of capital outflow, first by international investors and then the withdrawal of deposits from the Argentine banking system, eventually tipped the scales.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11353.
Date of creation: May 2005
Date of revision:
Publication status: published as Kathryn M. E. Dominguez, Linda L. Tesar. "International Borrowing and Macroeconomic Performance in Argentina," in Sebastian Edwards, editor, "Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences" University of Chicago Press (2007)
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- Kathryn M. E. Dominguez & Linda L. Tesar, 2007. "International Borrowing and Macroeconomic Performance in Argentina," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, pages 297-348 National Bureau of Economic Research, Inc.
- Kathryn M.E. Dominguez & Linda L. Tesar, 2004. "International Borrowing and Macroeconomic Performance in Argentina," Working Papers 532, Research Seminar in International Economics, University of Michigan.
- O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
- F3 - International Economics - - International Finance
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Luis Felipe Céspedes & Roberto Chang & Andrés Velasco, 2004.
"Balance Sheets and Exchange Rate Policy,"
American Economic Review,
American Economic Association, vol. 94(4), pages 1183-1193, September.
- Roberto Rigobon, 2001.
"The Curse of Non-Investment Grade Countries,"
NBER Working Papers
8636, National Bureau of Economic Research, Inc.
- Cavallo, Domingo F & Cottani, Joaquin A, 1997. "Argentina's Convertibility Plan and the IMF," American Economic Review, American Economic Association, vol. 87(2), pages 17-22, May.
- De Nicolo, Gianni & Honohan, Patrick & Ize, Alain, 2003.
"Dollarization of the banking system : good or bad?,"
Policy Research Working Paper Series
3116, The World Bank.
- Sebastian Edwards, 2002.
"The Great Exchange Rate Debate After Argentina,"
NBER Working Papers
9257, National Bureau of Economic Research, Inc.
- Edwards, Sebastian, 2002. "The great exchange rate debate after Argentina," The North American Journal of Economics and Finance, Elsevier, vol. 13(3), pages 237-252, December.
- Gerardo della Paolera & Alan M. Taylor, 2001. "Straining at the Anchor: The Argentine Currency Board and the Search for Macroeconomic Stability, 1880-1935," NBER Books, National Bureau of Economic Research, Inc, number paol01-1.
- Eduardo Levy Yeyati & Augusto de la Torre & Sergio Schmukler, 2003.
"Living and Dying with Hard Pegs: The Rise and Fall of Argentina´s Currency Board,"
Business School Working Papers
catorce, Universidad Torcuato Di Tella.
- Augusto de la Torre & Eduardo Levy Yeyati & Sergio L. Schmukler, 2003. "Living and Dying with Hard Pegs: The Rise and Fall of Argentina's Currency Board," Journal of LACEA Economia, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
- De la Torre, Augusto & Levy Yeyati, Eduardo & Schmukler, Sergio L., 2003. "Living and dying with hard pegs : the rise and fall of Argentina's currency board," Policy Research Working Paper Series 2980, The World Bank.
- Guillermo A. Calvo & Carmen M. Reinhart, 2002.
"Fear Of Floating,"
The Quarterly Journal of Economics,
MIT Press, vol. 117(2), pages 379-408, May.
- Ize, Alain & Yeyati, Eduardo Levy, 2003. "Financial dollarization," Journal of International Economics, Elsevier, vol. 59(2), pages 323-347, March.
- Justin M. Dubas & Byung-Joo Lee & Nelson C. Mark, 2005. "Effective Exchange Rate Classifications and Growth," NBER Working Papers 11272, National Bureau of Economic Research, Inc.
- Taylor, Alan M., 1998.
"Argentina and the world capital market: saving, investment, and international capital mobility in the twentieth century,"
Journal of Development Economics,
Elsevier, vol. 57(1), pages 147-184, October.
- Alan M. Taylor, 1997. "Argentina and the World Capital Market: Saving, Investment, and International Capital Mobility in the Twentieth Century," NBER Working Papers 6302, National Bureau of Economic Research, Inc.
- Reinhart, Carmen & Rogoff, Kenneth & Savastano, Miguel, 2003.
13932, University Library of Munich, Germany.
- Feldstein, Martin, 2002. "Argentina's Fall: Lessons from the Latest Financial Crisis," Scholarly Articles 2959849, Harvard University Department of Economics.
- Sebastian Galiani & Eduardo Levy Yeyati & Ernesto Schargrodsky, 2003.
"Financial Dollarization and Debt Deflation under a Currency Board,"
64, Universidad de San Andres, Departamento de Economia, revised Nov 2003.
- Galiani, Sebastian & Levy Yeyati, Eduardo & Schargrodsky, Ernesto, 2003. "Financial dollarization and debt deflation under a currency board," Emerging Markets Review, Elsevier, vol. 4(4), pages 340-367, December.
- Eduardo Levy Yeyati & Ernesto Schargrodsky & Sebastián Galiani, 2003. "Finantial Dollarization and Debt Deflation under a Currency Board," Business School Working Papers tres, Universidad Torcuato Di Tella.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2004.
"Serial Default and the "Paradox" of Rich to Poor Capital Flows,"
NBER Working Papers
10296, National Bureau of Economic Research, Inc.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2004. "Serial Default and the "Paradox" of Rich-to-Poor Capital Flows," American Economic Review, American Economic Association, vol. 94(2), pages 53-58, May.
- Reinhart, Carmen & Rogoff, Kenneth, 2004. "Serial default and the “paradox” of rich to poor capital flows," MPRA Paper 13997, University Library of Munich, Germany.
- Marcelo Dabos & Maria Laura Gomez Mera, 1998. "The Tequila Banking Crisis in Argentina," Working Papers 19, Universidad de San Andres, Departamento de Economia, revised Sep 1999.
- Sebastian Auguste & Kathryn M.E. Dominguez & Herman Kamil & Linda L. Tesar, 2002.
"Cross-Border Trading as a Mechanism for Capital Flight: ADRs and the Argentine Crisis,"
William Davidson Institute Working Papers Series
513, William Davidson Institute at the University of Michigan.
- Sebastian Auguste & Kathryn M.E. Dominguez & Herman Kamil & Linda L. Tesar, 2002. "Cross-Border Trading as a Mechanism for Capital Flight: ADRs and the Argentine Crisis," NBER Working Papers 9343, National Bureau of Economic Research, Inc.
- Alberto Alesina & Roberto Perotti, 1997. "Fiscal Adjustments in OECD Countries: Composition and Macroeconomic Effects," IMF Staff Papers, Palgrave Macmillan, vol. 44(2), pages 210-248, June.
- Federico Sturzenegger & Ernesto Schargrodsky & Sebastian Galiani & Paul Gertler, 2003. "The Costs and Benefits of Privatization in Argentina: A Microeconomic Analysis," Research Department Publications 3148, Inter-American Development Bank, Research Department.
- Barry Eichengreen & Ricardo Hausmann & Ugo Panizza, 2003. "Currency Mismatches, Debt Intolerance and Original Sin: Why They Are Not the Same and Why it Matters," NBER Working Papers 10036, National Bureau of Economic Research, Inc.
- Ricardo J. Caballero & Arvind Krishnamurthy, 2003. "Excessive Dollar Debt: Financial Development and Underinsurance," Journal of Finance, American Finance Association, vol. 58(2), pages 867-894, 04.
- Enrique G. Mendoza & Katherine A. Smith, 2002. "Margin Calls, Trading Costs, and Asset Prices in Emerging Markets: The Finanical Mechanics of the 'Sudden Stop' Phenomenon," NBER Working Papers 9286, National Bureau of Economic Research, Inc.
- Alfredo Cuevas, 2003. "Reforming Intergovernmental Fiscal Relations in Argentina," IMF Working Papers 03/90, International Monetary Fund.
- repec:rus:hseeco:123922 is not listed on IDEAS
- Francois J. Gurtner, 2004. "Why Did Argentina's Currency Board Collapse?," The World Economy, Wiley Blackwell, vol. 27(5), pages 679-697, 05.
- Maltritz, Dominik & Eichler, Stefan, 2010. "Currency crisis prediction using ADR market data: An options-based approach," International Journal of Forecasting, Elsevier, vol. 26(4), pages 858-884, October.
- Todd Keister & Huberto M. Ennis, 2007.
"Commitment and Equilibrium Bank Runs,"
2007 Meeting Papers
509, Society for Economic Dynamics.
- Agarwal, Sumit & Chomsisengphet, Souphala & Hassler, Olivier, 2005. "The impact of the 2001 financial crisis and the economic policy responses on the Argentine mortgage market," Journal of Housing Economics, Elsevier, vol. 14(3), pages 242-270, September.
- Maurice Obstfeld, 2009. "International Finance and Growth in Developing Countries: What Have We Learned?," NBER Working Papers 14691, National Bureau of Economic Research, Inc.
- Neil R. Ericsson & Steven B. Kamin, 2008. "Constructive data mining: modeling Argentine broad money demand," International Finance Discussion Papers 943, Board of Governors of the Federal Reserve System (U.S.).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.