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Argentina: Monetary Policy by Default

In: Monetary Policy and Macroeconomic Stabilization in Latin America


  • George T. McCandless

    (Central Bank of Argentina)


After the Argentine banking and financial crisis at the beginning of 2002, the Central Bank was left with few tools to use to mitigate the effects of the crisis and initiate monetary policy. After providing a brief review of the crisis, I consider the set of traditional monetary policy channels and evaluate which channels were available to the Argentine authorities and how they were able to exploit them after the crisis. I find that only three of the traditional monetary policy channels were fully functional: the exchange rate channel, the expectations channel, and the money channel. An interest rate channel existed, especially with the introduction of the LEBACs, but its effectiveness was reduced by the severe problems in the banking system. The asset channel, the credit channel, and the household balance sheet channel were almost irrelevant.

Suggested Citation

  • George T. McCandless, 2005. "Argentina: Monetary Policy by Default," Springer Books, in: Rolf J. Langhammer & Lúcio Vinhas Souza (ed.), Monetary Policy and Macroeconomic Stabilization in Latin America, pages 87-112, Springer.
  • Handle: RePEc:spr:sprchp:978-3-540-28201-3_5
    DOI: 10.1007/3-540-28201-7_5

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    Cited by:

    1. HSING, Yu, 2021. "Are The Predictions Of The Mundell-Fleming Model Applicable To Argentina?," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 21(1), pages 37-48.
    2. Brause, Alexander, 2008. "Foreign exchange interventions in emerging market countries: New lessons from Argentina," W.E.P. - Würzburg Economic Papers 79, University of Würzburg, Department of Economics.


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