Argentina Unveils Sweeping New Economic Plan Thomas Catán

The government of Argentina on Sunday set out a sweeping new plan to deal with the country's economic, social and constitutional crises. At the heart of the new plan is an effort to end Argentines' long love-affair with US dollar, which for 10 years has been used interchangeably with the peso. The government, which jettisoned the dollar peg last month, plans to float the currency entirely as early as this week, albeit with heavy state regulation to stop it from plunging. "We are going to 'pesify' the entire Argentine economy," said Jorge Remes Lenicov, economy minister. "We want our own…

What happened to Argentina? Mark Weisbrot and Dean Baker

Policy failures played a role in Argentina’s economic collapse. The most important mistake was the fixed exchange rate. But the immediate cause of Argentina’s crisis was a series of external shocks that were beyond its control, beginning with the US Federal Reserve Board’s decision to raise interest rate in February of 1984. The effect of these shocks was much worse than it otherwise would have been because of the fixed exchange rate. But the commonly believed story that the government could not accept a sufficient dose of the painful medicine of austerity, or spent its way into a hole, is…

Confronting the IMF – Argentina’s Road to Recovery Tom Gill

"For many years in Argentina," declared Eduardo Duhalde as he assumed the presidency on January 1, "they have made us believe that amid this new world order, there is only one possible economic model. This is a complete falsehood." Argentinians, who once lived in a country as rich as France, will be hoping he is right. These days, after two-and-half-decades of IMF-backed free-market reforms, more than 40% of the 38m population live below the poverty line and 100 children die daily from hunger and disease. As a leading member of the Peronist party, which under Carlos Menem brought Argentina to…

Distraught Argentines Look for Solutions

Peso plunges by 44 pc against dollar Argentina’s peso tumbled as much as 44 per cent against the dollar as exchange houses opened for the first time since the Government said it would devalue the cur­rency and default on its debts. The peso was quoted at 1.8 per dollar at money-changers in Buenos Aires, indicat­ing President, Mr Eduardo Duhalde, will fail to keep it fixed at the 1.4 rate set, trad­ers said. Mr Duhalde gave up the one-to-one peg to the dollar, in place for a decade, in a bid to revive growth and rebuild confi­dence in the economy. Hundreds…

Economic Debacle In Argentina : The IMF strikes again Arthur MacEwan

In the midst of their fourth year of recession, with the official unemployment rate approaching 20%, and with increasing cutbacks of social programs, Argentineans took to the streets in the days before Christmas. Sparked by the government's latest economic policies, which restricted the amount of money people could withdraw from their bank accounts, political demonstrations and the looting of grocery stores spread across the country. First the government declared a state of siege, but with the police often standing by watching the looting "with their hands behind their backs," there was little the government could do. Within a day after…

Argentina : A cautionary tale from South America Jayati Ghosh

The comprehensive mess in Argentina today almost defies belief. At the turn of the year, the financial and economic collapse was near total, with banks closed, the state of the currency (and even its very existence) in some doubt, rapidly increasing unemployment, decline in almost all public services and shortages of liquidity that threatened access to basic food and necessary goods for survival for much of the population. cautionary_tale (Download the full text in PDF format)

Tackling the World Recession John Grieve Smith

Few now doubt that the turbulent international situation has exacerbated and economic slowdown already underway across the advanced economies. The threat of recession has also led some to suggest that the pendulum might be ready to swing back from the monetarist and neoliberal consensus of the late twentieth century to a modernised and internationalist Keynesianism for the twenty-first. John Grieve Smith takes stock of these shifts, arguing that while the US has shown encouraging signs, EU and UK policymakers are still too wedded to the deflationary bias of the past. Furthermore, the paper argues, the mood for "re-ordering the world"…

Recession, Then a Boom? Maybe not this Time David Leonhardt

In decades past, the next step for an American economy in recession would be clear. It would boom. People would start spending again, and companies would quickly increase production, creating hundreds of thousands of jobs and fattening paychecks. In a quickly widening spiral, these developments would lead to even more spending. But the rules for recoveries may well be different today - not because of Sept. 11, but because of fundamental changes in the economy. Even after a year-end flurry of good news on home sales, consumer confidence and jobless claims, the recovery likely to start in 2002 could be…

IMF Program in Turkey Erinc Yeldan

The Turkish crisis, which came in the aftermath of an exchange rate-based disinflation attempt, comes as no surprise to anyone who is somewhat-informed about the international literature on country experiences of macroeconomic stabilization. In fact, the observed growth-crisis path of the Turkish economy is well in line with the main empirical regularities associated with exchange rate-based disinflation. turkish_crisis (Download the full text in PDF format)