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Growth, instability and the convertibility crisis in Argentina

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  • Fanelli, José María

Abstract

The Argentine economy is currently going through the deepest and most prolonged recession of the postwar period: a devastating panorama that contrasts vividly with its significant growth in 1991-1998.In this article we will analyse the macroeconomic dimensions of the crisis which led to the abandonment of convertibility.Firstly,we will identify some structural weaknesses of the Argentine economy that are a source of macroeconomic instability.In particular,we will study the role of the imperfect access to international capital markets,the limited openness,the lack of financial depth and the nominal and policy rigidities,as well as the role of the errors in expectations and volatility. Secondly,we will examine the sequence of disturbances (shocks);in 1998-1999,concluding that the simultaneity of many of them aggravated their effects and that,under the convertibility régime,the economy was not prepared to face such consequences.Finally,we will briefly outline the policies that the country should apply in order to restore macroeconomic and financial stability.

Suggested Citation

  • Fanelli, José María, 2002. "Growth, instability and the convertibility crisis in Argentina," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    • Handle: RePEc:ecr:col070:10884
    Note: Includes bibliography
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    Cited by:

    1. Arza,Valeria Luciana & Cirera,Xavier & Colonna,Agustina & Lopez,Emanuel, 2020. "Explaining Differences in the Returns to R&D in Argentina : The Role of Contextual Factors and Complementarities," Policy Research Working Paper Series 9219, The World Bank.
    2. Valeria Arza & Elisa Giuliani & Federica Nieri, 2019. "DRIFTING ON A CALMA CHICHA AFTER COUNTLESS STORMS: How macroeconomic uncertainty affects firms' de cisions to innovate in emerging countries," Discussion Papers 2019/251, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    3. Laurine Martinoty, 2014. "Intra-Household Coping Mechanisms in Hard Times: the Added Worker Effect in the 2001 Argentine Economic Crisis," Post-Print halshs-01076566, HAL.
    4. Arza, Valeria & López, Emanuel, 2021. "Obstacles affecting innovation in small and medium enterprises: Quantitative analysis of the Argentinean manufacturing sector," Research Policy, Elsevier, vol. 50(9).
    5. Andrea Vaona, 2013. "Countervailing inequality effects of globalization and renewable energy generation in Argentina," Working Papers 12/2013, University of Verona, Department of Economics.
    6. Martinoty, Laurine, 2022. "Partner’s income shock and female labor supply. Evidence from the repeal of Argentina’s convertibility law," World Development, Elsevier, vol. 159(C).
    7. Elosegui, Pedro & González, Mirta & Pérez, María Cecilia & Sangiácomo, Máximo, 2024. "A diffusion index analysis of the Argentinean business economic cycle based on the “Survey of Business Economic Perspectives”," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 5(2).

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