Political Economy in Argentina: The 2002 default-causes and remarks. (original) (raw)

Abstract

the currency board. 12 2.1. What a currency board is. 12 2.2. Evaluating a currency board. 17 2.3. The currency board in Argentina. 20 3. The events which lead to the 2001 crisis. 24 3.1. 1994: the "tequila crisis". 24 3.2. The late 90's: the depreciation of Real. 27 3.3. Menem's proposal: dollarization. 28 3.4. The excessive vulnerability to external shocks. 32 3.5. 1999-2001: De La Rua's attempt to stop the crisis. 35 4. Concluding remarks. 38 References 43 left wing peronism. The nomenclature "peronism" is just a populist term to attract the masses and win the election. 1.1. From the end of WWII to 1983.

Key takeaways

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  1. Argentina's 2001 default stemmed from excessive vulnerability to external shocks under a rigid currency board.
  2. The currency board, implemented in 1991, restricted Argentina's monetary policy, leading to economic instability.
  3. Fiscal deficits and political cycles exacerbated Argentina's economic challenges during the late 1990s.
  4. Crisis events, like the 1994 'tequila crisis', triggered a loss of confidence and banking instability in Argentina.
  5. The text aims to analyze the political economy factors contributing to Argentina's 2002 default.

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References (19)

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  3. Camilleri Gilson M. (2004), An Institutional Framework for Comparing Emerging Market Currency Boards IMF Working Paper WP/04/180, International Monetary Fund, Washington, DC. Damill M. Frenkel R. Rapetti M. (2005) La Deuda Argentina: Historia, Default y Reestructuración, CEDES Buenos Aires.
  4. Fanelli J.M., From: The Crisis That Was Not Prevented: Lessons for Argentina, the IMF, and Globalization, FONDAD, www.fondad.org
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  8. Levy Yeyati E. and Sturzenegger F. (2001), Dollarization: A Primer, Business School, Universidad Torcuato Di Tella, Buenos Aires.
  9. Khan M.(2008), 'Governance and Development: The Perspective of Growth-Enhancing Governance.' In: Diversity and Complementarity in Development Aid: East Asian Lessons for African Growth. GRIPS Development Forum/National Graduate Institute for Policy Studies, Tokyo.
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  11. Macchiati A., private comunication.
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  13. Rodrik D. (2003) From: The Crisis That Was Not Prevented: Lessons for Argentina, the IMF, and Globalization, FONDAD, www.fondad.org
  14. Ronchi V. (2010) Neoliberalismo e neopopulismo in America, latina il Mulino, Bologna Schuler, K. (1992). Currency Boards. Dissertation, George Mason University, Fairfax Virginia.
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  16. Williamson J. (1990), What Washington Means by Policy Reform, Chapter 2 from Latin American Adjustment: How Much Has Happened? Peterson Institute for International Economics, Washington, DC.
  17. Williamson J. (2004) A Short History of the Washington Consensus, Paper commissioned by Fundación CIDOB for a conference "From the Washington Consensus towards a new Global Governance," Barcelona, September 24-25, 2004.
  18. Wolf H.C., Ghosh A.R., Berger H., Gulde A. (2008) Currency Boards In Retrospect And Prospect, MIT Press, Cambridge Massachusetts.
  19. Yunus M. (1999), Banker to the Poor: Micro-Lending and the Battle Against World Poverty,, United States Public Affairs, New York. www.colorado.edu, Economic and Political Change in Argentina, Argentine projection page. www.economist.com, A decline without parallel, Feb 28th 2002, Buenos Aires.

FAQs

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What explains the rise of Peronism in Argentina's political landscape?add

The paper reveals that Juan Domingo Perón utilized socialist policies to form a lower class movement, gaining significant popularity and leading to a populist interpretation of Peronism in modern Argentina.

How did the Washington Consensus redefine Argentina's economic policies in the 1980s?add

The analysis finds that the Washington Consensus introduced neoliberal reforms that emphasized fiscal balance and disinvestment from state-owned enterprises, significantly reshaping Argentina's economic strategy during the transition from dictatorship to democracy.

What were the consequences of Argentina's currency board established in 1991?add

Argentina's 1991 currency board, pegging the peso to the USD, initially stabilized hyperinflation but ultimately hindered monetary flexibility, contributing to severe economic mismanagement by 2001.

When did Argentina's economy experience significant vulnerability to external shocks?add

The study indicates that Argentina's economic vulnerability sharply increased following the 1994 'tequila crisis,' leading to bank collapses and significant liquidity shortages amid a fixed exchange rate regime.

Why did Argentina's dollarization proposals fail during Menem's presidency?add

Menem's dollarization proposal was dismissed by Washington, primarily due to concerns over sovereign risks and the complexities of transitioning to a dollar-based economy without a formal agreement.