Beyond the diffusion of neoliberalism: Embedded reasoning and policy innovation in the origins of Argentinian currency board (original) (raw)
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Suffering from high rates of inflation since the 1940s and having experienced two hyperinflations at the end of the 1980s, in 2019 Argentina faced an increase of prices of more than 50%. But in the 1990s Argentina achieved price stability and growth at once. What were the sources of such an immediate change? What lessons can be drawn from this experience? As in the 1990s Argentina adopted profound market reforms, stability could be considered an achievement of neoliberal diffusion. Not only international forces were propelling change; the International Monetary Found (IMF) celebrated the success and invited other emerging nations to imitate it. Nevertheless, this perspective underestimates the importance of the local context in the history of neoliberal reforms and overestimates the coherence of external forces. Through the analysis of testimonies of Argentine and foreign officials and the study of declassified documents from the IMF, this paper argues that stability was only achieved after the adoption of a currency board, which was against the recommendation of most foreign officials. Instead of a simple top-down transposition of ideas, the Argentinian case reveals the importance of the agency of technocrats. Their local innovation not only made the diffusion of neoliberalism possible, but it also turned the currency board into one of the global anti-inflationist recipes recommended to other countries, despite its heavy consequences.
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Ensayos de Economía 60, 2022
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The rise and fall of Argentina's currency board shows the abandonmenlt of the currency board and a sovereign debt extent to which the advantages of hard pegs have bcen default. The crisis can be best interpreted as a bad overstated. The currency board did provide nomilinal outcome of a high-stakes strategy to overcome a weak stability and boosted financial intermediation, at the cost currency problem. To increase the credibility of the hard of endogenous finaicial dollarization, but did not foster peg, the government raised its exit costs, which deepened monetary or fiscal discipline. The failure to adequately the crisis once exit could no longer be avoided. But some address the currency-growth-debt trap into whichi alternative exit strategies would have been less Argentina fell at the end of the 1990s precipitated a run destructive than the one adopted. on the currency and the banks, followed by the This paper-a product of Macroeconomics and Growth, Development Research Group-is part of a larger effort in the group to understand 1ow currency regimes work. Copies of the paper are available free from the World Bank, 1818 H Street NW, Washinigton, DC 20433. Please contact Emily Khine, room MC3-347, telephone 202-473-7471, fax 202-522-3518, emilail address kkhiie@tworldbank.org. Policy Research Working lPapers are also posted on the Web at http:// econ.worldbank.org. The autIlors may be contacted at adelatorre@Rworldbank.org, elyv@utdt.edu, or sschmuklcr@worldbank.org. March 2003. (54 pages) hlbe P'olic Research Working Paper Series disseminates the findings of ivork in progress to encourage the exchange of ideas about developmient issuies Anl objective of the series is to get the findings ouit qtickly, eveni if the presentations are less than fully polisbed. The papers carry the iarnes of the atbhors and shouild be cited accordingly. The fiuidcigs, interpretations, and coniclisionis expressed in this paper are enitirely those of the autlbors. They do n(ot niecessartiy represent the vienv of the WIorld Bank, its Executtive Directors, or thse counitries tls)e represent.