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What can we learn from the current crisis in Argentina?

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  • Timothy J. Kehoe

Abstract

Currently, Argentina is experiencing what the government describes as a \\"great depression.\\" Using the \\"Great Depressions\\" methodology developed by Cole and Ohanian (1999) and Kehoe and Prescott (2002), we find that the primary determinants of both the boom in Argentina in the 1990s and the subsequent depression were changes in productivity, rather than changes in factor inputs. The timing of events links the boom to the currency-board-like Convertibility Plan and the crisis to its collapse. To gain credibility, the Argentine government took measures to make abandoning the plan more costly. Because the government was unable to enforce fiscal discipline, however, these increased costs failed to make the plan more credible and instead made the crisis far worse when it failed.

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  • Timothy J. Kehoe, 2003. "What can we learn from the current crisis in Argentina?," Staff Report 318, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmsr:318
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    1. Italeave: Mother of all financial crises
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2018-06-04 11:55:24

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    Cited by:

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    2. Dimitris Papageorgiou & Stylianos Tsiaras, 2021. "The Greek Great Depression from a neoclassical perspective," Working Papers 286, Bank of Greece.
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    4. Meza, Felipe & Benjamin, David, 2006. "Productivity in economies with financial frictions: facts and a theory," Discussion Paper Series In Economics And Econometrics 613, Economics Division, School of Social Sciences, University of Southampton.
    5. Nauro F. Campos & Menelaos G. Karanasos & Bin Tan, 2016. "From Riches to Rags, and Back? Institutional Change, Financial Development and Economic Growth in Argentina since 1890," Journal of Development Studies, Taylor & Francis Journals, vol. 52(2), pages 206-223, February.
    6. Çiçek, Deniz & Elgin, Ceyhun, 2011. "Not-quite-great depressions of Turkey: A quantitative analysis of economic growth over 1968–2004," Economic Modelling, Elsevier, vol. 28(6), pages 2691-2700.
    7. Jérôme Sgard, 2004. "Ce qu’on en dit après : le « currency board » argentin et sa fin tragique," SciencePo Working papers Main hal-01019663, HAL.
    8. Jérôme Sgard, 2004. "Ce qu’on en dit après : le « currency board » argentin et sa fin tragique," Revue d'Économie Financière, Programme National Persée, vol. 75(2), pages 129-151.
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    14. Jérôme Sgard, 2004. "Ce qu’on en dit après : le « currency board » argentin et sa fin tragique," Post-Print hal-01019663, HAL.
    15. Gogos, Stylianos G. & Mylonidis, Nikolaos & Papageorgiou, Dimitris & Vassilatos, Vanghelis, 2014. "1979–2001: A Greek great depression through the lens of neoclassical growth theory," Economic Modelling, Elsevier, vol. 36(C), pages 316-331.
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    Keywords

    Monetary policy - Argentina; Argentina;

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