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Exchange Market Pressure, Monetary Policy, and Economic Growth: Argentina in 1993 - 2004

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  • Nuria Malet
  • Clara Garcia
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    Abstract

    The pressure in the exchange market against a particular currency has been frequently measured as the sum of the loss of international reserves plus the loss of nominal value of that currency. This paper follows the tradition of investigating the interactions between such measure of exchange market pressure (EMP) and monetary policy; but it also questions the usual omission of output growth in the empirical investigations of the interrelations between EMP, domestic credit, and interest rates. The focus of this work is Argentina between 1993 and 2004. As in previous studies, we found some evidence of a positive and double-direction relationship between EMP and domestic credit. But output growth also played a role in the determination of EMP, even more than domestic credit or interest rates. Also, there is some evidence that EMP affected growth negatively.

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    File URL: http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_51-100/WP99.pdf
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    Bibliographic Info

    Paper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number wp99.

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    Date of creation: 2005
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    Handle: RePEc:uma:periwp:wp99

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    Keywords: exchange markets; international reserves; currency values; Argentine; exchange market pressure; monetary policy; output growth; domestic credit;

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    14. Graciela L. Kaminsky, 2003. "Varieties of Currency Crises," NBER Working Papers 10193, National Bureau of Economic Research, Inc.
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    17. Roberto Chang & Andres Velasco, 1998. "Financial Crises in Emerging Markets," NBER Working Papers 6606, National Bureau of Economic Research, Inc.
    18. Roberto Chang & Andres Velasco, 1998. "Financial crises in emerging markets: a canonical model," Working Paper 98-10, Federal Reserve Bank of Atlanta.
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