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

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  • Nicolás Cherny

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. JEL Classification: E02; F32; O24.

Suggested Citation

  • Nicolás Cherny, 2015. "Institutions, credibility and crisis: the inconsistencies of Argentine exchange rate policy (1991-2006)," Brazilian Journal of Political Economy, Center of Political Economy, vol. 35(1), pages 95-113.
    • Handle: RePEc:ekm:repojs:v:35:y:2015:i:1:p:95-113:id:216
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    File URL: https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/216/206
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    Cited by:

    1. Tai‐kuang Ho & Ya‐chi Lin & Kuo‐chun Yeh, 2021. "The case for starting a new exchange rate after debt settlement: Reexamining alternatives to Argentina’s exchange rate policy in 2001–2002," Review of International Economics, Wiley Blackwell, vol. 29(3), pages 641-662, August.

    More about this item

    Keywords

    economic policy; exchange rate crisis; convertibility; Argentina;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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