| Journal: | Revista venezolana de análisis de coyuntura |
| Database: | CLASE |
| System number: | 000254747 |
| Authors: | Zaragoza, Carlos E.J.M1 |
| Institutions: | 1Federal Reserve Bank, Dallas, Texas. Estados Unidos de América |
| Year: | 2003 |
| Season: | Ene-Jun |
| Volumen: | 9 |
| Number: | 1 |
| Pages: | 11-39 |
| Country: | Venezuela |
| Language: | Inglés |
| Document type: | Artículo |
| Approach: | Analítico |
| English abstract | Many experts, policymakers, and journalists had been enthusiastically advising Argentina to abandon the currency board arrangement that had been in place since 1991, on the grounds that it was choking its economy. They were disappointed when Argentina’s attempt to devalue “just a little” ended up in a collapse of its currency and real GDP. We argue that the reason why the devaluation “drug” didn’t cure Argentina is because the doctors who recommended it overlooked that the perfect information conditions required for the medication to work properly were not met by that country. We propose an alternative “diagnosis,” according to which the attempt to devalue “just a little” ends up in higher depreciation and inflation rates than originally intended. This prediction, consistent with the evidence for Argentina, suggests that non-state contingent (“rigid”,) monetary regimes, such as a currency board or outright dollarization, might dominate in a welfare sense, by virtue of a transparency-inducing feature, state-contingent (“flexible”) policies in countries like Argentina, where economic agents are unable to satisfactorily monitor the policymakers’ actions, as well as the underlying decision process |
| Disciplines: | Economía |
| Keyword: | Condiciones económicas, Política económica, Economía monetaria, Argentina, Devaluación, Política monetaria, Crisis económica, 2002 |
| Full text: | Texto completo (Ver PDF) |
