Hyperinflation, Currency Board, and Bust : : The Case of Argentina.

Hyperinflation, Currency Board, and Bust : : The Case of Argentina.

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Bibliographic Details
Superior document:Hohenheimer Volkswirtschaftliche Schriften Series ; v.56
:
Maute, Jutta.
Place / Publishing House:Frankfurt a.M. : : Peter Lang GmbH, Internationaler Verlag der Wissenschaften,, 2006.
©2006.
Year of Publication:2006
Edition:1st ed.
Language:English
Series:Hohenheimer Volkswirtschaftliche Schriften Series
Online Access:
Physical Description:1 online resource (294 pages)
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Table of Contents:
  • Cover
  • FIGURES
  • ABBREVIATIONS AND ACRONYMS
  • ACKNOWLEDGEMENTS
  • 1 INTRODUCTION
  • 2 ARGENTINA'S STABILISATION CHALLENGE
  • 2.1 PRECEDING STABILISATION ATTEMPTS SINCE THE DAYS OF PERÓN
  • 2.2 HIGH AND HYPERINFLATION IN ARGENTINA IN THE 1980s
  • 2.2.1 Rising Money Stock
  • 2.2.2 Government Finance
  • 2.2.2.1 Inflationary Bias of Governments
  • 2.2.2.2 Debt Structure
  • 2.2.2.3 Are Budget Deficits a Cause or a Consequence of Inflation?
  • 2.2.2.4 Erosion of Tax System
  • 2.2.2.5 Lack of Structured Budgeting Process
  • 2.2.2.6 Inflation Tax
  • 2.2.3 Monetary Regime
  • 2.2.3.1 Monetary Constitution
  • 2.2.3.2 Monetary Policy
  • 2.2.4 Inflation Expectations
  • 2.2.5 Symptoms of High Inflation
  • 2.2.5.1 Decreasing Demand for Real Money Stock
  • 2.2.5.2 Currency Substitution
  • 2.2.5.3 Undervaluation as a Consequence of Currency Substitution
  • 2.2.5.4 Acceleration and Variability of Inflation
  • 2.2.5.5 Real Price and Wage Variability
  • 2.2.5.6 Distortion and Excess Variability of Relative Prices
  • 2.2.5.7 Contracting Strategies
  • 2.2.5.8 Disappearance of Markets
  • 2.2.5.9 Economic Performance
  • 2.2.5.10 External Trade
  • 2.2.5.11 Distributional Effects of High Inflation
  • 2.2.6 From High to Hyperinflation
  • 2.3 OPTIONS FOR STABILISATION IN THE BEGINNING 1990s
  • 2.3.1 Political Feasibility of Reforms
  • 2.3.2 Shape of Reforms Ending Hyperinflation
  • 2.3.2.1 Monetary and Fiscal Reform
  • 2.3.2.2 External Anchor: Fixing the Exchange Rate
  • 2.3.3 Argentina's Choice
  • 3 STABILISATION VIA CURRENCY BOARD
  • 3.1 THE CURRENCY BOARD IDEA
  • 3.1.1 The Term
  • 3.1.2 The Concept
  • 3.1.3 Currency Board vs. Other Fixed Exchange Rate Arrangements
  • 3.1.4 Currency Board vs. Central Bank
  • 3.1.5 Excursus: Doctrinal History and the Currency Board Idea
  • 3.1.5.1 Doctrinal Positions: Mercantilist vs. Classical Views.
  • 3.1.5.2 The Bullionist and Banking-Currency Controversies
  • The Early 19th Century Bullionist Controversy
  • The 1840s Banking-Currency Controversy
  • Findings with Hindsight
  • 3.1.5.3 The Currency Board and Classical Monetary Theory
  • 3.1.5.4 From Colonial to Present-Day Currency Boards
  • Rationale of Colonial Currency Boards
  • Currency Boards Since 1849
  • 3.2 THE SPECIFICS AND FUNCTIONING OF A CURRENCY BOARD
  • 3.2.1 Constitutional Elements of a Currency Board
  • 3.2.1.1 Anchor Currency
  • 3.2.1.2 Fixed Exchange Rate
  • 3.2.1.3 Full Convertibility
  • 3.2.1.4 Conduct of Monetary Policy
  • Control of Private Money Creation
  • Clearing and Day-to-Day Monetary Operations
  • Lender of Last Resort Function
  • 3.2.1.5 Conduct of Fiscal Policy
  • 3.2.1.6 Institutional Preconditions
  • 3.2.2 Strengths and Weaknesses of a Currency Board
  • 3.2.2.1 Strengths of a Currency Board
  • Simplicity and Transparency
  • Credibility
  • Currency Stability
  • Interest Rate Convergence
  • Financial Intermediation
  • 3.2.2.2 Weaknesses of a Currency Board
  • Nominal Exchange Rate Rigidity and Exchange Rate Misalignments
  • Financial Fragility in the Absence of a Lender of Last Resort
  • Loss of Other Central Bank Functions
  • Constraints on Fiscal Policy
  • 3.2.3 Considerations for Adopting a Currency Board
  • 3.2.3.1 When is a Currency Board an Appropriate Choice?
  • 3.2.3.2 Implementation of a Currency Board
  • 3.2.4 Duration and Termination of a Currency Board
  • 3.2.4.1 Currency Board: Permanent or Transitional Arrangement?
  • 3.2.4.2 Exit Options
  • Built-in Escape Clauses
  • Depreciation
  • Appreciation
  • Switch to a Floating Exchange Rate
  • Switch in the Peg
  • 3.2.5 Dual Currency Boards: An Extended Proposal for Currency Stability
  • 4 THE ARGENTINE CURRENCY BOARD ARRANGEMENT
  • 4.1 FEATURES AND IMPLEMENTATION OF THE ARGENTINE CBA
  • 4.1.1 The Legal Fixing.
  • 4.1.1.1 The Convertibility Law
  • 4.1.1.2 The New Central Bank Law
  • 4.1.2 Assessment of the Argentine CBA's Configuration
  • 4.1.2.1 Orthodox and Non-Orthodox Elements
  • 4.1.2.2 The Choice of the Anchor and the Rate
  • 4.1.2.3 Suboptimal Currency Area
  • 4.2 THE STABILISATION TRACK DURING THE 1990s
  • 4.2.1 The Early 1990s' Economic Reforms
  • 4.2.1.1 Further Reforms Shaping the Monetary Frame
  • 4.2.1.2 Brady Restructuring
  • 4.2.1.3 Tax Reforms
  • 4.2.1.4 Federal Fiscal Relations
  • 4.2.1.5 Privatisation and Deregulation
  • 4.2.1.6 Financial Sector Reform
  • 4.2.1.7 Social Security Reform
  • 4.2.1.8 Labour Market Reforms
  • 4.2.1.9 Trade Liberalisation
  • 4.2.2 The Early 1990s' Economic Performance: 1991-1994
  • 4.2.2.1 Monetary and Financial Development
  • 4.2.2.2 Economic Activity
  • 4.2.2.3 Fiscal Development
  • 4.2.2.4 Unemployment and Income Distribution
  • 4.2.3 Coping with the Tequila Crisis: 1995
  • 4.2.3.1 The Tequila Effect
  • 4.2.3.2 Currency and Bank Run
  • 4.2.3.3 Managing the Crisis
  • 4.2.3.4 Financial Sector Reforms in the Wake of Tequila
  • 4.2.3.5 Fiscal Adjustment Following Tequila
  • 4.2.4 The Second Expansionary Phase after Tequila: 1996-1998
  • 4.2.5 The Late 1990s' Recession: 1999-2001
  • 4.2.5.1 The Asian, Russian, and Brazilian Crises
  • 4.2.5.2 More Adverse External Shocks
  • 4.2.5.3 Recession cum Deflation
  • 4.2.5.4 Real Appreciation of the Peso
  • 4.2.5.5 Fiscal Atrophy
  • 4.2.5.6 Limited Financial Sector Robustness
  • 4.2.5.7 Further Labour Market Reforms
  • 4.2.6 The Run Up to the Collapse: 2001
  • 4.2.6.1 Meddling with the CBA
  • 4.2.6.2 Emission of Quasi-Monies
  • 4.2.6.3 Social and Political Overflow, and the End of the CBA
  • 4.2.7 A Sketch of the Post-Collapse
  • 5 WHAT WENT WRONG?
  • 5.1 THE MAIN SUSPECTS
  • 5.1.1 Fiscal Imbalance
  • 5.1.1.1 Persistent Budget Deficits
  • 5.1.1.2 Total Indebtedness.
  • 5.1.2 Overvalued Exchange Rate
  • 5.1.2.1 Real Appreciation before 1998
  • 5.1.2.2 The Real Exchange Rate after 1998
  • 5.1.3 Sudden Stop
  • 5.1.3.1 Leveraged Argentina
  • 5.1.3.2 Debt Sustainability
  • 5.1.3.3 The Sudden Stop in the Region
  • 5.1.4 Shock Exacerbation within MERCOSUR
  • 5.1.4.1 1994-1998: Fixed Here, Fixed plus Sterilisation There
  • 5.1.4.2 1999-2001: Fixed Here, Floating plus Sterilisation There
  • 5.1.4.3 Exposed within MERCOSUR
  • 5.1.5 Institutional Defects
  • 5.1.5.1 Insufficient Labour Market Reforms
  • 5.1.5.2 Insufficient Diversification of Production
  • 5.1.5.3 Banking Sector Reforms Impaired
  • 5.1.5.4 Other Deficient Reforms
  • 5.1.6 Politics
  • 5.1.7 The IMF
  • 5.1.7.1 The IMF and the CBA
  • 5.1.7.2 Outline of the IMF's Engagement 1991-2001
  • 5.1.7.3 The Role of the IMF during 1991 to 2000
  • 5.1.7.4 The Role of the IMF in the Crisis
  • 5.1.7.5 The Fund's Responsibilities
  • 5.1.8 The Washington Consensus
  • 5.1.9 The Currency Board Itself
  • 5.2 TAKING STOCK
  • 5.2.1 Vulnerability
  • 5.2.2 Triggers
  • 5.3 MISSED OPPORTUNITIES?
  • 5.3.1 Soft Exit during 1993/1994
  • 5.3.2 Soft Exit during the Second Expansionary Phase
  • 5.3.3 Hard Exit after the External Shocks of the Late Nineties
  • 5.3.4 Exit towards Full Dollarisation until 1999
  • 5.3.5 Dollarisation in the Midst of Crisis
  • 6 CONCLUSION
  • Some Lessons
  • Argentina's New Challenge
  • BIBLIOGRAPHY
  • STATISTICAL APPENDIX
  • Macro Indicators
  • Financial and Banking Indicators
  • Fiscal Indicators
  • Distribution and Poverty Indicators
  • Selected Data.

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