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The Political Economy of Exchange Rate Policies in Argentina

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  • Eugenio Diaz Bonilla
  • Hector E. Schamis

Abstract

This paper identifies three periods in Argentine exchange rate policy, corresponding with different development strategies and political coalitions. The first, periodic adjustments to a pegged rate until the mid-1970s, accompanied an Import Substitution Industrialization approach and a redistribution of income from agrarian to industrial production during an era of strong labor union influence. A second period, from the mid-1970s, marked by accelerated devaluations, represented efforts by both military and civilian governments to meet the demands of their respective constituencies while maintaining capital flows from abroad; these efforts culminated in hyperinflation. A third period, beginning in the early 1990s, was notable for exchange rate stability, based on the Convertibility Plan, as a broad consensus emerged that the exchange rate should be used for containing inflation rather than engaging in redistribution among domestic interest groups. The authors conclude that additional innovations in Argentina`s monetary and exchange rate policies may eventually be necessary.

Suggested Citation

  • Eugenio Diaz Bonilla & Hector E. Schamis, 1999. "The Political Economy of Exchange Rate Policies in Argentina," Research Department Publications 3078, Inter-American Development Bank, Research Department.
  • Handle: RePEc:idb:wpaper:3078
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    Cited by:

    1. Ernesto H. Stein & Jeffry Frieden, 2000. "The Political Economy of Exchange Rate Policy in Latin America: An Analytical Overview," Research Department Publications 3118, Inter-American Development Bank, Research Department.

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