Miller, Marcus, 1941-, García Fronti, Javier I. and Zhang, Lei, Dr. (2005) Contractionary devaluation and credit crunch: analysing Argentina. Working Paper. University of Warwick. Centre for the Study of Globalisation and Regionalisation, Coventry.

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Abstract

Sharp economic contraction often follows currency devaluation in emerging markets - due mainly to liability dollarisation. Such adverse balance sheet effects play a key role in the well-known model of Aghio et al (2000), by reducing investment and future supply. We show how the prompt contraction of output can be accounted for by incorporating demand failure - due to a slow export response and a credit crunch. The resulting eclectic framework is used to study the collapse of the Argentine economy when Convertibility ended in 2002; and to see why efforts to imitate President Roosevelt by 'pesifying' the economy proved counter-productive.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HG Finance
Divisions:	Faculty of Social Sciences > Economics Faculty of Social Sciences > Centre for the Study of Globalisation and Regionalisation
Library of Congress Subject Headings (LCSH):	Financial crises, Devaluation of currency, Keynesian economics, Recessions, Credit control -- Argentina, Argentina -- Economic conditions -- 1983-
Series Name:	Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation)
Publisher:	University of Warwick. Centre for the Study of Globalisation and Regionalisation
Place of Publication:	Coventry
Date:	October 2005
Number:	No.190
Number of Pages:	39
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Funder:	Economic and Social Research Council (Great Britain) (ESRC)
Grant number:	RES-051-27-0125 (ESRC), RES-156-25-0032 (ESRC)
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URI:	http://wrap.warwick.ac.uk/id/eprint/1913

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