Contractionary devaluation and credit crunch: analysing Argentina
Miller, Marcus, García Fronti, Javier I. and Zhang, Lei (2005) Contractionary devaluation and credit crunch: analysing Argentina. Working Paper. Coventry: University of Warwick. Centre for the Study of Globalisation and Regionalisation. Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation) (No.190).
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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|
|Official Date:||October 2005|
|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|Status:||Not Peer Reviewed|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)|
Aghion, Philippe, Philippe Bacchetta & Abhijit Banerjee (2000), `A simple model of
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