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Five years of competitive and stable real exchange rate in Argentina, 2002-2007

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  • Roberto Frenkel
  • Martin Rapetti

Abstract

We argue that the macroeconomic regime focused on the preservation of a stable and competitive real exchange rate (SCRER) has been a key factor explaining the rapid growth experienced in Argentina during 2002-2007. This policy promoted economic growth not only by preserving external and fiscal accounts sustainability, but also by providing incentives to the tradable sector and thus encouraging the expansion of its production, employment and investment. Monetary and exchange rate policies aimed at preserving a SCRER collide with conventional wisdom, particularly with the open economy trilemma. We argue that the critiques based on the trilemma may fail to hold in situations of excess supply of foreign currency and analyze the conditions under which the SCRER policy is sustainable.

Suggested Citation

  • Roberto Frenkel & Martin Rapetti, 2008. "Five years of competitive and stable real exchange rate in Argentina, 2002-2007," International Review of Applied Economics, Taylor & Francis Journals, vol. 22(2), pages 215-226.
  • Handle: RePEc:taf:irapec:v:22:y:2008:i:2:p:215-226
    DOI: 10.1080/02692170701880734
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    References listed on IDEAS

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    1. Mario Damill, 2005. "The Argentinean Debt: History, Default and Restructuring," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 6(3), pages 29-90.
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    6. Alan M. Taylor & Mark P. Taylor, 2004. "The Purchasing Power Parity Debate," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 135-158, Fall.
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    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Crying for Argentina, again?
      by Triplecrisis in Triple Crisis on 2013-06-13 19:17:47

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    Cited by:

    1. Frenkel, Roberto & Rapetti, Martin, 2014. "The real exchange rate as a target of macroeconomic policy," MPRA Paper 59335, University Library of Munich, Germany.
    2. Ahmet Benlialper & Hasan Cömert, 2016. "Implicit asymmetric exchange rate peg under inflation targeting regimes: the case of Turkey," Cambridge Journal of Economics, Oxford University Press, vol. 40(6), pages 1553-1580.
    3. Nouira, Ridha & Sekkat, Khalid, 2012. "Desperately seeking the positive impact of undervaluation on growth," Journal of Macroeconomics, Elsevier, vol. 34(2), pages 537-552.
    4. Mario Cimoli & Wellington Pereira & Gabriel Porcile & Fábio Scatolin, 2011. "Structural change, technology, and economic growth: Brazil and the CIBS in a comparative perspective," Economic Change and Restructuring, Springer, vol. 44(1), pages 25-47, April.
    5. Giovanni Andrea Cornia & Bruno Martorano, 2012. "Development Policies and Income Inequality in Selected Developing Regions, 1980–2010," UNCTAD Discussion Papers 210, United Nations Conference on Trade and Development.
    6. Giovanni Andrea Cornia, 2012. "The New Structuralist Macroeconomics and Income Inequality," Working Papers - Economics wp2012_25.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    7. Giovanni Andrea Cornia & Bruno Martorano, 2010. "Policies for Reducing Income Inequality: Latin America During the Last Decade," Working papers 1006, UNICEF,Division of Policy and Strategy.
    8. Giovanni Andrea Cornia, 2012. "Inequality Trends and their Determinants: Latin America over 1990-2010," WIDER Working Paper Series wp-2012-009, World Institute for Development Economic Research (UNU-WIDER).
    9. Khalid Sekkat, 2012. "Exchange Rate Undervaluation, Financial Development and Growth," Working Papers 742, Economic Research Forum, revised Dec 2012.
    10. Frenkel, Roberto, 2008. "The competitive real exchange-rate regime, inflation and monetary policy," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    11. Gonzalo Hern�ndez Jim�nez & Arslan Razmi, 2014. "Latin America after the global crisis: the role of export-led and tradable-led growth regimes," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(6), pages 713-741, September.
    12. Groisman, Fernando, 2008. "Distributive effects during the expansionary phase in Argentina (2002-2007)," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    13. repec:ilo:ilowps:434439 is not listed on IDEAS
    14. Martín Rapetti, 2013. "The Real Exchange Rate and Economic Growth: Some Observations on the Possible Channels," UMASS Amherst Economics Working Papers 2013-11, University of Massachusetts Amherst, Department of Economics.
    15. Wang, Yiwei & Wang, Ke & Chang, Chun-Ping, 2019. "The impacts of economic sanctions on exchange rate volatility," Economic Modelling, Elsevier, vol. 82(C), pages 58-65.
    16. Roberto Frenkel & Martin Rapetti, 2010. "A Concise History of Exchange Rate Regimes in Latin America," UMASS Amherst Economics Working Papers 2010-01, University of Massachusetts Amherst, Department of Economics.
    17. Giovanni Andrea Cornia, 2012. "Inequality Trends and their Determinants: Latin America over 1990-2010," Working Papers - Economics wp2012_02.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    18. repec:unu:wpaper:wp2012-09 is not listed on IDEAS
    19. repec:ilo:ilowps:455446 is not listed on IDEAS
    20. Rapetti, Martin, 2012. "Theories of real exchange rate determination: A brief survey," MPRA Paper 109369, University Library of Munich, Germany.
    21. Gerald Epstein, 2009. "Rethinking Monetary and Financial Policy: Practical suggestions for monitoring financial stability while generating employment and poverty reduction," Published Studies ilo_epstein11_09, Political Economy Research Institute, University of Massachusetts at Amherst.
    22. Gerald Epstein & James Heintz & Léonce Ndikumana & Grace Chang, 2011. "Employment, Poverty and Economic Development in Madagascar," Published Studies ndikumana_ilo2010, Political Economy Research Institute, University of Massachusetts at Amherst.
    23. Frenkel, Roberto & Rapetti, Martín, 2012. "Exchange rate regimes in the major Latin American countries since the 1950s: lessons from history," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 30(1), pages 157-188, January.
    24. Jan Kregel, 2011. "Debtors' Crisis or Creditors' Crisis? Who Pays for the European Sovereign and Subprime Mortgage Losses?," Economics Public Policy Brief Archive ppb_121, Levy Economics Institute.
    25. Arslan Razmi & Martin Rapetti & Peter Skott, 2009. "The Real Exchange Rate as an Instrument of Development Policy," UMASS Amherst Economics Working Papers 2009-07, University of Massachusetts Amherst, Department of Economics.

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