Argentina: The Central Bank in the Foreign Exchange Market

This article, originally published in Spanish in La Nacion, December 31, 2006, explains the mechanics of the Argentine Central Bank's intervention in exchange rates markets to target a stable and competitive exchange rate, a macroeconomic policy that has played a significant role in Argentina's economic growth since 2002

Argentina: The Central Bank in the Foreign Exchange Market

This article, originally published in Spanish in La Nación, December 31, 2006, explains the mechanics of the Argentine Central Bank's intervention in exchange rates markets to target a stable and competitive exchange rate, a macroeconomic policy that has played a significant role in Argentina's economic growth since 2002.

Argentina's Monetary and Exchange Rate Policies after the Convertibility Regime Collapse

This paper offers a comprehensive look at how Argentina managed a remarkable economic recovery from its collapse in 2001. The authors show how the Argentine government's policy of targeting a stable and competitive real exchange rate was crucial to the country's economic recovery. They also analyze the various sources of aggregate demand and government revenue in different phases of the expansion. In addition to the crucial role of the exchange rate, the authors look at other policies -- such as an export tax, capital controls, and the default on much of the country's sovereign debt -- which were met with disapproval by many economists and other commentators but played an important role in the recovery

A Concise History of Exchange Rate Regimes in Latin America

The paper analyzes exchange rate regimes implemented by the major Latin American countries since the Second World War, with special attention on the period of the second globalization process beginning in the 1970s. The analysis follows a historical narrative aiming to provide an understanding of the domestic and external circumstances in which various regimes were adopted. A simple conceptual framework is developed in order to emphasize how the exchange rate regime may affect key nominal and real variables in a small open economy. After an overview of the main trends followed by the major countries in the region over the last 60 years, the paper focuses on regimes that were implemented 1) with stabilization purposes (nominal anchors) and 2) with the aim of targeting the level of the real exchange rate. These two sections analyze in greater detail some experiences illustrating the pros and cons of both strategies. The paper closes with an assessment about exchange rate experiences in Latin America. JEL Categories: F41, N16, F31Latin America, exchange rate regimes, real exchange rate, inflation targeting.

Argentina's Monetary and Exchange Rate Policies after the Convertibility Regime Collapse

This paper offers a comprehensive look at how Argentina managed a remarkable economic recovery from its collapse in 2001. The authors show how the Argentine government's policy of targeting a stable and competitive real exchange rate was crucial to the country's economic recovery. They also analyze the various sources of aggregate demand and government revenue in different phases of the expansion. In addition to the crucial role of the exchange rate, the authors look at other policies - such as an export tax, capital controls, and the default on much of the country's sovereign debt - which were met with disapproval by many economists and other commentators but played an important role in the recovery.

Real Exchange Rate, Monetary Policy and Employment

The exchange rate affects the economy through many channels and, consequently, has diverse macroeconomic and development impacts. Five are analysed in this paper: resource allocation, economic development, finance, external balance and inflation. The use of the exchange rate as a developmental tool in conjunction with its other uses (often in coordination with monetary policy) is at the focus of the discussion.exchange rate, development policy

The Argentinian Debt: History, Default, and Restructuring

We believe that the study of the Argentinean foreign debt needs no justification. For almost three decades, Argentina's foreign debt was continuously one of the main concerns of economic policy. Yet, both the record amount of the defaulted debt and the novel characteristics of its restructuring may be sufficient reasons to include an analysis of Argentina in a selection of studies about sovereign debt. Therefore, the processes that led to the default of the debt and its subsequent restructuring constitute one of the main focuses of this work. However, the Argentinean case also presents other aspects that demand attention, our analysis takes these into account as well. The Argentinean experience is often used as an example of general arguments that take the country as a notable particular case. The rhetoric power of the example precisely comes from its supposedly well-known characteristics, yet sometimes these characteristics appear exempt of solid proofs. Many are second hand references and in some cases not even that but the mere mentioning of a "consensual image". Thus we are motivated to take a close look at what happened in Argentina. This work is in part a polemic against some of those references that we consider fallacious. Each reference involves certain facts that we examine and try to explain. Our criticism also reaches the general plausibility of the argument that falsely takes the Argentinean case as an example. We think that the plausibility of an argument is strongly questioned when the argument is proved false in the case serving as its notable example

TIPO DE CAMBIO REAL COMPETITIVO, INFLACIÓN Y POLÍTICA MONETARIA

Editorial Review To analyze the sustainability of economic development models based on a “competitive” real exchange rate target is what leads R. Frenkel to reassess some macroeconomic policy dilemmas. Three key issues are stressed. In the first place, the author emphasizes the feasibility of conducting an active monetary policy, through a model that converges to a system of (strong) constraints that determine the “degrees of freedom” of monetary policy under this regime. Secondly, the author sets out the need for understanding the role of aggregate demand policies as offsetting (in an antiinflationary sense) the expansionary effects that exchange rate policy has on employment and economic activity. In this respect, the greater effectiveness of fiscal policy to attain such goal is finally remarked.Analizar la sustentabilidad de los modelos de desarrollo económico basados en un target de tipo de cambio real “competitivo” lleva a R. Frenkel a replantear en este artículo algunos dilemas de política macroeconómica. Se destacan tres ideas fuerza. En primer lugar, el autor rescata la viabilidad de mantener una política monetaria activa, a través de un modelo que concluye en un sistema de restricciones (fuertes) que determinan los “grados de libertad” de la política monetaria bajo este régimen. En segundo lugar, el autor plantea la necesidad de entender el rol de las políticas de demanda agregada en tanto compensadoras (antinflacionarias) de los efectos expansivos que la política cambiaria genera en la actividad y el empleo. En este sentido, se destaca finalmente la mayor efectividad de la política fiscal para lograr tal objetivo.&nbsp

Tipo de cambio real competitivo, inflación y política monetaria

Incluye BibliografíaEste artículo plantea que en un régimen macroeconómico detipo de cambio real competitivo y estable (tcrce); el componentecambiario puede fomentar la inflación con los mismos mecanismos queestimulan altas tasas de crecimiento del producto interno bruto y delempleo; la presión tendrá que compensarse controlando la demandaagregada a través de las políticas fiscal y monetaria. Encuentra quela política monetaria en un régimen cambiario de ese tipo tiene ungrado de autonomía que puede ser utilizado para aplicar políticasmonetarias activas. Analiza hasta qué punto la política monetaria puedecontribuir a controlar la demanda agregada y concluye que la principalresponsabilidad en ese terreno no corresponde a la política monetaria,de modo que el control de la demanda agregada debería realizarseprincipalmente a través de la política fiscal