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The North from the South


  • Javier Finkman



This paper analyzes similarities and differences between the Argentine crisis and the current crisis in developed countries, with its epicenter in the United States. Most economists of the North relate the current collapse to that of the 1930s. However, I argue here that the crises undergone by developing countries should be a useful reference when analyzing the global meltdown. This is not an original argument. Both Reinhart and Rogoff have found many common elements in the banking crises of developed and developing countries. They have studied the depth and duration of the crises based on a combined sample of countries and experiences. My purpose is, instead, to establish some analogies and determine their limits, between the 2001-2002 Argentine crisis and the United States crisis. The policy actions being implemented to respond to the global meltdown include both fiscal and monetary measures with an unprecedented scope in the post-war developed world. Among other actions, the interventions encompass low interest rates, expansion of the monetary base in open market operations including the direct purchase of low-quality assets, increasingly wider discount windows (as regards both the quality and quantity of the assets accepted), loans or contingent lines for financial institutions for the purchase of financial institutions, total or partial nationalizations, as well as a highly flexible regulatory framework. In turn, deposit insurances were increased either partially or totally. And, of course, there were also fiscal stimulus programs of different sizes. These public interventions have no relation whatsoever with the typical counter-cyclical policy whose purpose is to lessen the business cycle. Even more, the incubation of a crisis implies an exaggerated expansionary process, which presupposes the absence of a previously appropriate stabilization policy. Therefore, by definition, the post-crisis interventions are also exceptional. In fact, they are exceptional for the North but, except for the difference in the financial sophistication level, these interventions are more frequent in the South and this legitimates the use of an analogy-based reasoning.

Suggested Citation

  • Javier Finkman, 2009. "The North from the South," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(53-54), pages 107-115, January -.
  • Handle: RePEc:bcr:ensayo:v:1:y:2009:i:53-54:p:107-115

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    References listed on IDEAS

    1. Ricardo J. Caballero & Emmanuel Farhi & Pierre-Olivier Gourinchas, 2008. "An Equilibrium Model of "Global Imbalances" and Low Interest Rates," American Economic Review, American Economic Association, vol. 98(1), pages 358-393, March.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "The Aftermath of Financial Crises," American Economic Review, American Economic Association, vol. 99(2), pages 466-472, May.
    3. repec:tcd:wpaper:tep16 is not listed on IDEAS
    4. Philip R. Lane & Gian Maria Milesi-Ferretti, 2007. "A Global Perspective on External Positions," NBER Chapters,in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 67-102 National Bureau of Economic Research, Inc.
    5. Reinhart, Carmen M. & Rogoff, Kenneth S., 2013. "Banking crises: An equal opportunity menace," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4557-4573.
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    More about this item


    Argentina; international crisis; macroeconomic policy; United States;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • G01 - Financial Economics - - General - - - Financial Crises
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management


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