Seigniorage and Inflation: The Case of Argentina (original) (raw)

Inflation and seigniorage in Argentina

1989

The Policy. Planning, and Research Complcx disuributcs PPR Working Papers to disseminate thc fEndings of work in progress and to enoourage the exchange of ideas among Bank staff and all others intcrested in development issues. These papers carry the names of the authors, ...

Economic Potentiality And Consequences Of Inflation In Argentina

Journal of Business Case Studies (JBCS), 2011

This paper provides insight on Argentina's crisis since the default in an attempt to find a way out of the economic crisis. In 1991 Argentina pegged its peso to the U.S. dollar to stabilize the economic conditions and it set in restrictions on the issuance of money to control hyperinflation. The problem faced by Argentina has come from what will be termed econogenocide, that is, killing ones own economy through its own acts, procedures, policies, and reforms. However, there are more signs that the economy is over the worst. An examination of the policies and procedures that caused the downfall of this nations once thriving economy can show the tell-tale signs that other nations may need to watch out for, and protect against.

Inflation and stabilization in Argentina

Economic Modelling, 1995

This paper reports the results of simulation experiments which were conducted by using a CGE model of Argentina. The results suggest that: the economy could not have been stabilized by using the preannouneed devaluation rate during 1978-81; economic performance could have improved in 1985-89 under a modified Austral plan but, with the altered structure, there would still be a severe currency appreciation; and the Convertibility Law based programme is very successful in arresting inflation and eliminating a budget deficit, though it is not free from side effects such as money supply shortages and high interest rates.

Inflation in Argentina: Stop and go since the Austral plan

World Development, 1991

This paper examines the Argentine experience with inflation and stabilization attempts between 1985 (the time of the launching of the Austral plan) and late 1988. The Austral plan was a heterodox program in the sense that it initially combined orthodox components-such as a tightening in fiscal and monetary policy-with less orthodox ones such as wage and price controls. While the design of the Austral program was sophisticated, the inability to deal with the structural fiscal problem made this effort futile. In addition, the repeated use of price and wage controls in follow-up stabilization attempts was a mistake as it led to greater inflation variability, as it induced additional price and wage increases in anticipation of a new round of controls. *The views expressed in this paper are my own, and should not be attributed to the World Bank and its affiliated institutions. This paper is part of the research project, Stopping High Inflation, supported by the World Bank. I greatly benefited from lengthy discussions with Ernesto Feldman and Nissan Liviatan and from comments by Juan Carlos de Pablo, Bill Easterly, Federico Sturzenegger, Enrique Szewach, Steve Webb and two anonymous referees. Jariya Charoenwattana provided valuable research assistance.

A dynamic model of the demand for currency: Argentina 1977–1988

Journal of Policy Modeling, 1992

This work models money in the complex, highly indationary environment of Argentina (1977-1988). First, cointegration techniques proposed by Engle and Granger (1987) and extended by Johansen (1988) are applied anJ show that real cash balances, income and inflation are cointegrated. Second, data information are used to specify the dynamics of this relationship, following the "general-to-specific" methodology developed by Hendry et al. The model selected appears to be a satisfactory representation of money demand, including being empirically constant over 1985-1988, during which there were major policy change s. However, constant, well-specified inflation or interest rate equations cannot be &a.ined by inverting the money demand equation, given the results found when testing for s1zpzr exogeneity.

Understanding money demand of Argentina: 1935-2000

Séptimas Jornadas de …, 2002

This paper investigates whether or not a simple-Cagan like-econometric model of demand for currency can be developed for Argentina based on more than sixty years of data (1935-2000). For such a long period the presence of structural breaks cannot be ignored given the variety of economic regimes this country has experienced. The purpose is to understand from an "expost" perspective how money holdings have reacted to the two main determinants of their demand: a transaction variable and an opportunity cost after suitable approximations for both concepts could be obtained. Transaction elasticity estimates matter for the distribution effects of inflation tax and for measuring the size of the shadow economy. Besides, a comparative analysis of the effect of inflation, interest rates and exchange rates could clarify about the relevant opportunity cost of holding money. Once two values of the transaction elasticity were taken for the long run relationship (1 and 0.5) and inflation and interest rates alternatively measured the opportunity cost of holding money, a stable money demand-a satisfactory approximation to the data generating process-was obtained for the Argentina case. Preliminary Version. Comments Welcome.

Understanding the money–prices relationship under low and high inflation regimes: Argentina 1977–2006

Journal of International Money and Finance, 2006

We study the regime dependence of the money–prices relationship, focusing on Argentina's experience over the last 30 years. Using descriptive and cointegration analysis we find that proportionality holds for the high inflation period but weakens once inflation lowers. Money velocity correlates positively with money growth under high inflation, while this relation reverts under low inflation. VAR analysis allows to identify the key role of inflation expectations in driving the short-run dynamics of the money growth–inflation relationship under high inflation. Although this relationship weakens under low inflation, money continues to play a role in explaining inflation dynamics in Argentina.