IDEAS home Printed from https://ideas.repec.org/p/sad/wpaper/135.html
   My bibliography  Save this paper

Macri´s Macro: The meandering road to stability and growth

Author

Listed:
  • Federico Sturzenegger

    () (Universidad de San Andres)

Abstract

This paper reviews the various macroeconomic stabilization programs implemented during the Macri government between 2015 and 2019. We find that after an initial success, each program was discontinued because of a distinct form of fiscal dominance: as pensions are indexed with a lag and represent a large portion of spending, quick disinflations jeopardize fiscal consolidation. Lack of progress on the fiscal front made these reversals unavoidable.

Suggested Citation

  • Federico Sturzenegger, 2019. "Macri´s Macro: The meandering road to stability and growth," Working Papers 135, Universidad de San Andres, Departamento de Economia, revised Oct 2019.
    • Handle: RePEc:sad:wpaper:135
    as

    Download full text from publisher

    File URL: https://webacademicos.udesa.edu.ar/pub/econ/doc135.pdf
    File Function: First version, July 2019
    Download Restriction: no

    References listed on IDEAS

    as
    1. Martin Larch & Alessandro Turrini, 2010. "The cyclically adjusted budget balance in EU fiscal policymaking," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 45(1), pages 48-60, January.
    2. Rudiger Dornbusch & Sebastian Edwards, 1991. "The Macroeconomics of Populism in Latin America," NBER Books, National Bureau of Economic Research, Inc, number dorn91-1, March.
    3. Korhonen, Iikka & Nuutilainen, Riikka, 2017. "Breaking monetary policy rules in Russia," Russian Journal of Economics, Elsevier, vol. 3(4), pages 366-378.
    4. John H. Cochrane, 2011. "Determinacy and Identification with Taylor Rules," Journal of Political Economy, University of Chicago Press, vol. 119(3), pages 565-615.
    5. Levy-Yeyati, Eduardo & Sturzenegger, Federico, 2007. "A Balance-Sheet Approach to Fiscal Sustainability," Working Paper Series rwp07-044, Harvard University, John F. Kennedy School of Government.
    6. Luca Benati & Robert Lucas, Jr. & Juan Nicolini & Warren Weber, 2016. "International Evidence on Long Run Money Demand," Working Papers id:11152, eSocialSciences.
    7. Francesco Grigoli & José M. Mota, 2017. "Interest rate pass-through in the Dominican Republic," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 26(1), pages 1-25, December.
    8. Daianu, Daniel & Kallai, Ella, 2008. "Disinflation and Inflation Targeting in Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 5(1), pages 59-81, March.
    9. Eduardo Levy-Yeyati & Federico Sturzenegger, 2003. "To Float or to Fix: Evidence on the Impact of Exchange Rate Regimes on Growth," American Economic Review, American Economic Association, vol. 93(4), pages 1173-1193, September.
    10. Roberto Golinelli & Riccardo Rovelli, 2002. "Painless disinflation? Monetary policy rules in Hungary, 1991‐99," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(1), pages 55-91.
    11. László Nagy, 2016. "From Independent Slovakian Central Bank Policy to the Monetary Policy of the Euro Area," Public Finance Quarterly, State Audit Office of Hungary, vol. 61(1), pages 49-64.
    12. di Giovanni, Julian & Shambaugh, Jay C., 2008. "The impact of foreign interest rates on the economy: The role of the exchange rate regime," Journal of International Economics, Elsevier, vol. 74(2), pages 341-361, March.
    13. Bassetto, Marco & Phelan, Christopher, 2015. "Speculative runs on interest rate pegs," Journal of Monetary Economics, Elsevier, vol. 73(C), pages 99-114.
    14. Gottschalk, Jan & Moore, David, 2001. "Implementing Inflation Targeting Regimes: The Case of Poland," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 24-39, March.
    15. Michael Bruno & Guido Di Tella & Rudiger Dornbusch & Stanley Fischer, 1988. "Inflation Stabilization: The Experience of Israel, Argentina, Brazil, Bolivia, and Mexico," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022796, September.
    16. Moron, Eduardo & Winkelried, Diego, 2005. "Monetary policy rules for financially vulnerable economies," Journal of Development Economics, Elsevier, vol. 76(1), pages 23-51, February.
    17. Gibbs, Christopher G. & Kulish, Mariano, 2017. "Disinflations in a model of imperfectly anchored expectations," European Economic Review, Elsevier, vol. 100(C), pages 157-174.
    18. Jeffrey Frankel & Ben Smit & Federico Sturzenegger, 2008. "Fiscal and monetary policy in a commodity‐based economy1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 679-713, October.
    19. De Paoli, Bianca, 2009. "Monetary policy and welfare in a small open economy," Journal of International Economics, Elsevier, vol. 77(1), pages 11-22, February.
    20. M. Zholamanova & M. Arzayeva R. Doszhan & A. Turlybekova A. Kukiev, 2018. "Devaluation in Kazakhstan: History, Causes, Consequences," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 831-842.
    21. Rudiger Dornbusch & Sebastian Edwards, 1991. "The Macroeconomics of Populism," NBER Chapters, in: The Macroeconomics of Populism in Latin America, pages 7-13, National Bureau of Economic Research, Inc.
    22. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-971, October.
    23. Philip Arestis & Fernando Ferrari-Filho & Luiz Fernando de Paula, 2011. "Inflation targeting in Brazil," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(2), pages 127-148.
    24. Guillermo A. Calvo, 1991. "The Perils of Sterilization," IMF Staff Papers, Palgrave Macmillan, vol. 38(4), pages 921-926, December.
    25. Sturzenegger, Federico & Zettelmeyer, Jeromin, 2008. "Haircuts: Estimating investor losses in sovereign debt restructurings, 1998-2005," Journal of International Money and Finance, Elsevier, vol. 27(5), pages 780-805, September.
    26. Thorolfur Matthiasson, 2008. "Spinning out of control, Iceland in crisis," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 34, pages 1-3.
    27. Olcay Çulha & Ali Çulha & Rauf Gönenç, 2008. "The Challenges of Monetary Policy in Turkey," OECD Economics Department Working Papers 646, OECD Publishing.
    28. Ortiz, Alberto & Pablo, Ottonello & Sturzenegger, Federico & Talvi, Ernesto, 2007. "Monetary and Fiscal Policies in a Sudden Stop: Is Tighter Brighter?," Working Paper Series rwp07-057, Harvard University, John F. Kennedy School of Government.
    29. Christian Daude & Ángel Melguizo & Alejandro Neut, 2010. "Fiscal Policy in Latin America: Countercyclical and Sustainable at Last?," OECD Development Centre Working Papers 291, OECD Publishing.
    30. Levy-Yeyati, Eduardo & Sturzenegger, Federico, 2005. "Classifying exchange rate regimes: Deeds vs. words," European Economic Review, Elsevier, vol. 49(6), pages 1603-1635, August.
    31. Eduardo Levy Yeyati & Federico Sturzenegger, 2016. "Classifying Exchange Rate Regimes: 15 Years Later," CID Working Papers 319, Center for International Development at Harvard University.
    32. Frederic S. Mishkin, 2000. "Inflation Targeting in Emerging-Market Countries," American Economic Review, American Economic Association, vol. 90(2), pages 105-109, May.
    33. Mishkin, Frederic S. & Savastano, Miguel A., 2001. "Monetary policy strategies for Latin America," Journal of Development Economics, Elsevier, vol. 66(2), pages 415-444, December.
    34. Sargent, Thomas J & Wallace, Neil, 1975. ""Rational" Expectations, the Optimal Monetary Instrument, and the Optimal Money Supply Rule," Journal of Political Economy, University of Chicago Press, vol. 83(2), pages 241-254, April.
    35. Schmidt-Hebbel, Klaus & Tapia, Matias, 2002. "Inflation targeting in Chile," The North American Journal of Economics and Finance, Elsevier, vol. 13(2), pages 125-146, August.
    36. Pourroy, Marc, 2012. "Does exchange rate control improve inflation targeting in emerging economies?," Economics Letters, Elsevier, vol. 116(3), pages 448-450.
    37. Juan J. Cruces & Christoph Trebesch, 2013. "Sovereign Defaults: The Price of Haircuts," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(3), pages 85-117, July.
    38. Leonardo Leiderman & Hadas Bar-Or, 2000. "Monetary Policy Rules and Transmission Mechanisms Under Inflation Targeting in Israel," Working Papers Central Bank of Chile 71, Central Bank of Chile.
    39. José De Gregorio & Andrea Tokman & Rodrigo Valdés, 2005. "Flexible Exchange Rate with Inflation Targeting in Chile: Experience and Issues," Research Department Publications 4427, Inter-American Development Bank, Research Department.
    40. Lorna Katusiime & Frank W. Agbola, 2018. "Modelling the impact of central bank intervention on exchange rate volatility under inflation targeting," Applied Economics, Taylor & Francis Journals, vol. 50(40), pages 4373-4386, August.
    41. Alberto Cavallo & Roberto Rigobon, 2016. "The Billion Prices Project: Using Online Prices for Measurement and Research," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 151-178, Spring.
    42. Guillermo A. Calvo, 1998. "Capital Flows and Capital-Market Crises: The Simple Economics of Sudden Stops," Journal of Applied Economics, Universidad del CEMA, vol. 1, pages 35-54, November.
    43. Federico Sturzenegger & Jeromin Zettelmeyer, 2007. "Creditors' Losses Versus Debt Relief: Results from a Decade of Sovereign Debt Crises," Journal of the European Economic Association, MIT Press, vol. 5(2-3), pages 343-351, 04-05.
    44. José De Gregorio & Andrea Tokman & Rodrigo Valdés, 2005. "Flexible Exchange Rate with Inflation Targeting in Chile: Experience and Issues," Research Department Publications 4427, Inter-American Development Bank, Research Department.
    45. M S Mohanty & Philip Turner, 2005. "Intervention: what are the domestic consequences?," BIS Papers chapters, in: Bank for International Settlements (ed.), Foreign exchange market intervention in emerging markets: motives, techniques and implications, volume 24, pages 56-81, Bank for International Settlements.
    46. Ramayandi , Arief & Rosario, Aleli, 2010. "Monetary Policy Discipline and Macroeconomic Performance: The Case of Indonesia," ADB Economics Working Paper Series 238, Asian Development Bank.
    47. Bank Indonesia, 2005. "Foreign exchange intervention and policy: Bank Indonesia experiences," BIS Papers chapters, in: Bank for International Settlements (ed.), Foreign exchange market intervention in emerging markets: motives, techniques and implications, volume 24, pages 177-87, Bank for International Settlements.
    48. Nelson H. Barbosa-Filho, 2009. "Inflation Targeting in Brazil: 1999–2006," Chapters, in: Gerald A. Epstein & A. Erinc Yeldan (ed.),Beyond Inflation Targeting, chapter 7, Edward Elgar Publishing.
    49. Dobrota, Gabriela, 2007. "The Foreign Currency Regime and Policy in Romania," MPRA Paper 11433, University Library of Munich, Germany.
    50. Frederic S. Mishkin & Klaus Schmidt-Hebbel, 2001. "One Decade of Inflation Targeting in the World: What Do We Know and What Do We Need to Know?," NBER Working Papers 8397, National Bureau of Economic Research, Inc.
    51. Garcia, Carlos J. & Restrepo, Jorge E. & Roger, Scott, 2011. "How much should inflation targeters care about the exchange rate?," Journal of International Money and Finance, Elsevier, vol. 30(7), pages 1590-1617.
    52. Rudiger Dornbusch & Sebastian Edwards, 1991. "Introduction to "The Macroeconomics of Populism in Latin America"," NBER Chapters, in: The Macroeconomics of Populism in Latin America, pages 1-4, National Bureau of Economic Research, Inc.
    53. Rodolfo E. Manuelli & Juan I. Vizcaino, 2017. "Monetary Policy with Declining Deficits: Theory and an Application to Recent Argentine Monetary Policy," Review, Federal Reserve Bank of St. Louis, vol. 99(4), pages 351-375.
    54. Andrés Felipe Giraldo & Martha Misas Arango & Edgar Villa Pérez, 2011. "Reconstructing the recent monetary policy history of Colombia from 1990 to 2010," Vniversitas Económica 008860, Universidad Javeriana - Bogotá.
    55. Anton Grui & Volodymyr Lepushynskyi, 2016. "Applying Foreign Exchange Interventions as an Additional Instrument Under Inflation Targeting: The Case of Ukraine," Visnyk of the National Bank of Ukraine, National Bank of Ukraine, issue 238, pages 39-56.
    56. Martín Uribe, 2016. "Is The Monetarist Arithmetic Unpleasant?," NBER Working Papers 22866, National Bureau of Economic Research, Inc.
    57. Lloyd R. Kenward, 2013. "Inflation targeting in Indonesia, 1999--2012: an ex-post review," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 49(3), pages 305-327, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dominguez-Cardoza, Angelica & Trebesch, Christoph, 2019. "Und wieder Argentinien: Warum das Land vor dem neunten Staatsbankrott steht," Kiel Policy Brief 130, Kiel Institute for the World Economy (IfW).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Frankel, Jeffrey, 2010. "Monetary Policy in Emerging Markets," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 25, pages 1439-1520, Elsevier.
    2. Akhand Akhtar Hossain, 2009. "Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 12777.
    3. Mehrotra, Aaron & Sánchez-Fung, José R., 2011. "Assessing McCallum and Taylor rules in a cross-section of emerging market economies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 21(2), pages 207-228, April.
    4. Kose, Ayhan & Matsuoka, Hideaki & Panizza, Ugo & Vorisek, Dana, 2019. "Inflation Expectations: Review and Evidence," CEPR Discussion Papers 13601, C.E.P.R. Discussion Papers.
    5. Adnen Chockri & Ibticem Frihka, 2011. "La portée de la politique de ciblage d’inflation: Approche analytique et empirique pour le cas Tunisien," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(1), pages 91-111, March.
    6. Frederic S. Miskin & Klaus Schmidt-Hebbel, 2007. "Does Inflation Targeting Make a Difference?," Central Banking, Analysis, and Economic Policies Book Series, in: Frederic S. Miskin & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.),Monetary Policy under Inflation Targeting, edition 1, volume 11, chapter 9, pages 291-372, Central Bank of Chile.
    7. Muhammad Naveed Tahir, 2011. "Inflation Targeting, Exchange Rate and Financial Globalization," Working Papers 1130, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    8. Amato, Jeffery D. & Gerlach, Stefan, 2002. "Inflation targeting in emerging market and transition economies: Lessons after a decade," European Economic Review, Elsevier, vol. 46(4-5), pages 781-790, May.
    9. Mihalache, Gabriel, 2020. "Sovereign default resolution through maturity extension," Journal of International Economics, Elsevier, vol. 125(C).
    10. Carlos A Vegh & Guillermo Vuletin, 2014. "The Road to Redemption: Policy Response to Crises in Latin America," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 62(4), pages 526-568, November.
    11. Muhammad Naveed Tahir, 2011. "Inflation Targeting, Exchange Rate and Financial Globalization," Working Papers halshs-00646601, HAL.
    12. Nadav Ben Zeev, 2017. "Exchange Rate Regimes And Sudden Stops," Working Papers 1712, Ben-Gurion University of the Negev, Department of Economics.
    13. Ardakani, Omid & Kishor, Kundan & Song, Suyong, 2015. "On the Effectiveness of Inflation Targeting: Evidence from a Semiparametric Approach," MPRA Paper 75091, University Library of Munich, Germany.
    14. Ardakani, Omid M. & Kishor, N. Kundan & Song, Suyong, 2018. "Re-evaluating the effectiveness of inflation targeting," Journal of Economic Dynamics and Control, Elsevier, vol. 90(C), pages 76-97.
    15. Jesus M. Garcia-Iglesias & Rebeca Muñoz Torres & George Saridakis, 2013. "Did the Bank of Mexico follow a systematic behaviour in its transition to an inflation targeting regime?," Applied Financial Economics, Taylor & Francis Journals, vol. 23(14), pages 1205-1213, July.
    16. Ben Zeev, Nadav, 2019. "Global credit supply shocks and exchange rate regimes," Journal of International Economics, Elsevier, vol. 116(C), pages 1-32.
    17. Sebastian Edwards, 2006. "The Relationship Between Exchange Rates and Inflation Targeting Revisited," Working Papers Central Bank of Chile 409, Central Bank of Chile.
    18. Esther Barros-Campello & Carlos Pateiro-Rodríguez & J. Venancio Salcines-Cristal & Carlos Pateiro-López, 2017. "El esquema de objetivos de inflación: Evidencia para América Latina (1999-2015)," Estudios de Economia, University of Chile, Department of Economics, vol. 44(2 Year 20), pages 223-250, December.
    19. Seghezza, Elena & Pittaluga, Giovanni B., 2018. "Resource rents and populism in resource-dependent economies," European Journal of Political Economy, Elsevier, vol. 54(C), pages 83-88.
    20. Ethan Ilzetzki & Carmen M Reinhart & Kenneth S Rogoff, 2019. "Exchange Arrangements Entering the Twenty-First Century: Which Anchor will Hold?," The Quarterly Journal of Economics, Oxford University Press, vol. 134(2), pages 599-646.

    More about this item

    Keywords

    inflation targeting; inflation targets; fiscal policy; backward indexation; Lebacs; Macri´s Presidency;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sad:wpaper:135. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tamara Sulaque). General contact details of provider: http://edirc.repec.org/data/desanar.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.