We analyze Argentina's macroeconomic policy and performance between 2003 and 2013. The period began with a rapid recovery following the 2001-02 crisis. Recovery then turned into strong and sustained growth. By late 2011, despite a very favorable external context, Argentina entered a stagflationary trap. Facing a visible lack of foreign exchange, the authorities introduced and reinforced a series of controls, which did not prevent a currency crisis in late 2013 and early 2014. We argue that macroeconomic performance during the whole period was closely related to the way macroeconomic policy was conducted. More specifically, we claim that the shift from high growth to stagflation was due to a change in the approach to macroeconomic policy: from one aiming to preserve a stable and competitive real exchange rate and twin surpluses, to another one of populist orientation.
Latin American economies are facing the consequences of falling commodity prices, the appreciation of the dollar, the deceleration of China, the uncertainty arising from the difficulties facing the periphery of the Eurozone, and the prospect of upcoming increases in interest rates by the Federal Reserve. The challenges that these difficulties pose to central bank and macro policy in Argentina, Venezuela and five "floating cum inflation target" (FIT) countries: Brazil, Chile, Colombia, Mexico and Peru are presented in this symposium, along with suggested alternatives to current policy orientations. 1 This introduction presents an overview of exchange rates and monetary policies in L.A. in the 2000s that is a common framework to the Symposium papers which provide more detailed analysis of particular national cases. The changes in international environment mentioned above follow a prolonged period that may be characterized by symptoms of "Dutch Disease". The negative impact on the productive structures have weakened the reaction of the Latin American economies to the new circumstances, for example slowing the responses of the tradable sectors to exchange rate signals, after long periods of real appreciation. In some national cases, reductions in inflation, the decline in the burden of external indebtedness and the accumulation of reserves during the early 2000's are important assets for macro policies in the new conditions, but imbalances in the external accounts and in some cases in fiscal accounts worsened considerably, as for instance in Colombia with falling oil and other export prices, and similarly in Chile, exposing significant vulnerabilities. During the early years of the 2000s, most Latin American countries had already introduced floating exchange rate regimes: Mexico following its 1995 crisis; Brazil, Colombia and Chile in 1999. Argentina and Uruguay maintained fixed exchange rates until their end-of-decade crises and recovered from them with floating exchange rates in 2002. Peru has had a managed floating exchange rate regime since the 1990s and formally adopted an inflation targeting regime in 2002.
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