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Parallel Markets and the Effectiveness of Exchange Controls in Argentina: 1981–9

In: Parallel Exchange Rates in Developing Countries

Author

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  • Steven B. Kamin

Abstract

Argentina’s history of exchange controls and parallel exchange markets dates from the beginning of the 1930s and has persisted, with occasional episodes of liberalization, nearly to the present. The most recent unbroken period of exchange controls in Argentina lasted from early 1982 to the end of 1989 and coincided with one of the most turbulent periods of macroeconomic crisis in Argentina’s history. Faced with balance of payments problems, accelerating inflation, and severe private sector indebtedness, the authorities imposed exchange controls as an alternative to a mix of real devaluation and fiscal adjustment that would have secured long-term stability, but at the cost of short-term contraction. In the absence of fundamental reforms, the macroeconomic crisis deepened, leading to the hyperinflations of mid-1989 and the first quarter of 1990. This hyperinflation, in turn, generated balance of payments pressures so strong as to force the abandonment of exchange controls and the floating of the currency in December 1989.

Suggested Citation

  • Steven B. Kamin, 1997. "Parallel Markets and the Effectiveness of Exchange Controls in Argentina: 1981–9," Palgrave Macmillan Books, in: Miguel A. Kiguel & J. Saul Lizondo & Stephen A. O’Connell (ed.), Parallel Exchange Rates in Developing Countries, chapter 2, pages 77-109, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-25520-7_3
    DOI: 10.1007/978-1-349-25520-7_3
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