Hard Peg versus Soft Float. A Tale of Two Latin-American Countries
This paper deals with how the exchange-rate regime of Argentina and Mexico shaped macroeconomic performance over the period 1994-2001. The purpose of the analysis is to draw lessons for Latin American and other countries on whether and how the choice of the exchange-rate regime can help sustained growth. As it is impossible to isolate the growth effect of the exchange-rate regime in a comparative country study, the paper emphasises those macro variables that have been identified in the theoretical and empirical literature as important channels through which the choice of the regime affects economic performance: a) investment, b) trade openness, c) capital flows and d) fiscal or institutional rigidities and public debt sustainability. These channel checks confirm 1997/1998 as the “breakeven” year, since Mexico’s managed floating currency regime has yielded, higher pay off relative to Argentina’s currency board, faced with successive external shocks.
References listed on IDEAS
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.:
- Jeffrey Sachs & Aaron Tornell & Andres Velasco, 1996.
"Financial Crises in Emerging Markets: The Lessons from 1995,"
Harvard Institute of Economic Research Working Papers
1759, Harvard - Institute of Economic Research.
- Jeffrey D. Sachs & Aaron Tornell & Andrés Velasco, 1996. "Financial Crises in Emerging Markets: The Lessons from 1995," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 147-216.
- Jeffrey Sachs & Aaron Tornell & Andres Velasco, 1996. "Financial Crises in Emerging Markets: The Lessons from 1995," NBER Working Papers 5576, National Bureau of Economic Research, Inc.
- Andreas Freytag, 2002. "Choice of an Exchange-Rate Arrangement, Institutional Setting and Inflation: Empirical Evidence From Latin America," OECD Development Centre Working Papers 198, OECD Publishing.
- John Williamson, 2000.
"Exchange Rate Regimes for Emerging Markets: Reviving the Intermediate Option,"
Peterson Institute Press: Policy Analyses in International Economics,
Peterson Institute for International Economics, number pa60.
- John Williamson, 2000. "Exchange Rate Regimes for Emerging Markets: Reviving the Intermediate Option," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa60.
- Ffrench-Davis, Ricardo & Larraín, Guillermo, 2003.
"How optimal are the extremes?: Latin American exchange rate policies during the Asian crisis,"
Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1797.
- Ffrench-Davis, Ricardo & Larrain, Guillermo, 2002. "How Optimal are the Extremes? Latin American Exchange Rate Policies During the Asian Crisis," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Eduardo Borensztein & Andrew Berg, 2000. "The Pros and Cons of Full Dollarization," IMF Working Papers 00/50, International Monetary Fund.
- Carlos A. Rodríguez, 1999. "Macroeconomic Policies: Can We Transfer Lessons Across LDC's?," CEMA Working Papers: Serie Documentos de Trabajo. 150, Universidad del CEMA.
- Felipe Morandé & Klaus Schmidt-Hebbel, 2000.
"Chile's Peso: Better Than (Just) Living with the Dollar?,"
Working Papers Central Bank of Chile
68, Central Bank of Chile.
- Felipe Morandé & Klaus Schmidt-Hebbel, 2000. "Chile's Peso: Better than (Just) Living with the Dollar?," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 37(110), pages 177-226.
- Andrew K. Rose, 1999.
"One Money, One Market: Estimating the Effect of Common Currencies on Trade,"
NBER Working Papers
7432, National Bureau of Economic Research, Inc.
- Rose, Andrew K, 1999. "One Money, One Market: Estimating the Effect of Common Currencies on Trade," CEPR Discussion Papers 2329, C.E.P.R. Discussion Papers.
- Rose, Andrew, 1999. "One Money, One Market: Estimating the Effect of Common Currencies on Trade," Seminar Papers 678, Stockholm University, Institute for International Economic Studies.
- Yan Sun, 2003. "Do Fixed Exchange Rates Induce More Fiscal Discipline?," IMF Working Papers 03/78, International Monetary Fund.
- Julio Nogués & Martín Grandes, 2001. "COUNTRY RISK: Economic Policy, Contagion Effect or Political noise?," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 125-162, May.
- Reinhart, Carmen & Calvo, Guillermo, 2002.
"Fear of floating,"
14000, University Library of Munich, Germany.
- Vivek B. Arora & Martin D. Cerisola, 2000. "How Does U.S. Monetary Policy Influence Economic Conditions in Emerging Markets?," IMF Working Papers 00/148, International Monetary Fund.
- Reisen, Helmut & Soto, Marcelo, 2001. "Which Types of Capital Inflows Foster Developing-Country Growth?," International Finance, Wiley Blackwell, vol. 4(1), pages 1-14, Spring.
- Reisen, Helmut, 1989. "Public debt, North and South," Policy Research Working Paper Series 253, The World Bank.
- Kristian Nilsson & Lars Nilsson, 2000. "Exchange Rate Regimes and Export Performance of Developing Countries," The World Economy, Wiley Blackwell, vol. 23(3), pages 331-349, 03.
- Schmidt-Hebbel, Klaus & Serven, Luis & Solimano, Andres, 1994. "Saving, investment, and growth in developing countries : an overview," Policy Research Working Paper Series 1382, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:cai:recosp:reco_545_1057. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jean-Baptiste de Vathaire)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.