Institutions, credibility and crisis: the inconsistencies of Argentine exchange rate policy (1991-2006)

Abstract

RESUmO: Este artigo tem dois objetivos. O primeiro é explicar as inconsistências do regime de conversibilidade que levaram à crise de 2001. O argumento sugere que os requisitos de credibilidade para a convertibilidade induziram uma dinâmica de compromissos jurí-dicos, fiscais, financeiros e externos que aumentaram os custos de saída e inconsistências de tempo. O segundo objetivo é explicar as tensões do regime flutuante que substituiu a conversibilidade em 2002. Nós descrevemos os efeitos de uma taxa de câmbio flutuante em desequilíbrio macroeconômico e a crescente tensão entre a competitividade e a inflação. PALAVRAS-CHAVE: Política econômica; crise da taxa de câmbio; convertibilidade; Argentina.ABSTRACT: The purpose of this article is twofold. The first is to explain the time inconsistencies of the convertibility regime that led to the 2001 crisis. The argument suggests that the credibility requirements for convertibility induced a dynamic of legal, fiscal, financial and external commitments that increased exit costs and time inconsistencies. The second objective is to explain the tensions of the floating regime that replaced convertibility in 2002. we describe the effects of a floating exchange rate on macroeconomic imbalance and the growing tension between competitiveness and inflation.

The case for starting a new exchange rate after debt settlement: Reexamining alternatives to Argentina’s exchange rate policy in 2001–2002

“…Even though several authors have suggested about the postcrisis monetary regime that Argentina should take (Calvo, 2001; Cherny, 2015; De La Torre et al., 2002; Krugman, 2001; Roubini, 2001), analytical studies on the issue are relatively few. Of the few studies’ findings we are aware of, dollarization cannot prevent a recession, and limiting the continuing accumulation of foreign debt is a precondition for the floating exchange rate to be expansionary.…”