Chapter

The Anatomy of a Multiple Crisis: Why was Argentina Special and What Can We Learn from It?

Guillermo Perry and Luis Servén

in Monetary Unions and Hard Pegs

Published in print March 2004 | ISBN: 9780199271405
Published online August 2004 | e-ISBN: 9780191601200 | DOI: http://dx.doi.org/10.1093/0199271402.003.0012
 The Anatomy of a Multiple Crisis: Why was Argentina Special and What Can We Learn from It?

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The Argentine crisis has been variously blamed on fiscal imbalances, real overvaluation, and self-fulfilling investor pessimism triggering a capital flow reversal. This chapter provides a full assessment of the role of these and other ingredients in the collapse. It shows that in the final years of its Convertibility program, Argentina was not hit harder than other emerging markets in Latin America by global terms-of-trade shocks and financial disturbances. Hence the crisis reflects primarily the high vulnerability to disturbances built into Argentina’s policy framework. These fragilities reinforced each other in such a way that taken jointly they led to a much larger vulnerability to adverse external shocks than in any other country in the region.

Keywords: Argentine crisis; banking crises; currency board; currency crises; currency mismatches; emerging markets; external shocks; fiscal imbalances; optimal currency area; terms of trade

Chapter.  19213 words.  Illustrated.

Subjects: Economic Systems

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