Monetary Policy And Balance Of Payment Crisis Of Argentina

Inflation is one of the most talked about words in society that causes a big problem in economics today. Inflation is an increase in the overall prices of goods and services and a decline in the purchasing value of money. This exists when the money supply surpasses the goods and services that are available. For this commentary, I chose to pick the article In a Venezuela Ravaged by Inflation, ‘a Race for Survival’ that deals with the topic inflation.

According to this approach, in order to get IMF loans, any assisted country should go through reforms focused on the three major pillars of fiscal austerity, privatization and liberalization (Stiglitz, 2002, p. 53). During all the 90s, Argentina's economic policies were under the strict control of a supporting program established by IMF (IEO of IMF, 2003), so during the deep crisis happened between 1998 and 2002, IMF was already in charge with its approach. Throughout all this period, Argentina strictly applied the IMF formula and realized a number of structural reforms, "reducing budget and balance of payment deficits, raising interest rates, reducing inflation, privatizing state assets, and reducing trade barriers and regulation on capital flows in and out of the country" (Paddock, 2002, p. 158). This program did not produce the results expected by IMF. Instead, it produced recession and a strong dependence of Argentina's government on IMF loans to support its growing debt (Paddock, 2002). Primary economic and social indicators clearly show the sufferings of Argentina during that period: between 1998 and 2002, GDP passed from 292 billion dollars to 97 billion dollars (The World Bank, 2017), while unemployment grew from to 12.8% to 19.6% (The World Bank, 2017). Argentina stepped out of the crisis only after defaulting and devaluating, i.e. after

The financial crisis in Argentina during the late 1990s and early 2000s resulted in severe issues with foreign debt, inflation, unemployment, and political turmoil for the country. Argentina not only suffered a currency crisis, but also suffered a political crisis. Fallout from the economic collapse was so severe the Argentinean population resorted to civil unrest and protest, which in turn exacerbated Argentina’s problems at the turn of the century. While other issues related to this financial crisis such as the impact on the lives of the Argentinean population or the political turmoil and corruption are certainly worthy of discussion, this paper will focus on the currency crisis and the Argentinean government’s role in this economic

Around the late 1980’s and 1990’s, the GDP fell by 5% and price inflation reached 100%. After this period, the Dominican Republic was about to experience a new stage of development. It became a time of moderate growth and declining inflation. In 1995 inflation was roughly at 9%, while GDP grew by 4.5%. A year later the inflation rates dropped 5% and the GDP grew to about 7.3%.

There isn’t a pattern in the last 10 years for inflation changing. Inflation currently for October is 2.0, in October of last year it was 1.6 so it raised quite a bit in the last year. But in October 2007 inflation was 3.5,

It was the time between the middle of the 19th century and the beginning of the 20th century when the fertile low lands were being exploited which brought major economic growth to the country. Argentina was one of the world’s wealthiest nation per capita and being so high only made the decline that much harder. The deterioration of Argentina beginning with the depression era in the 1930 was epic; a new power and a new man in charge of the country ended the stability of the fledging country. Add that to the great depression in the United States and you have crashing markets all over the world and the most unstable Argentina has ever been.

What gains their ground so sensational is Latin America's history of populist financial aspects. "Macroeconomic unsteadiness has long been a striking highlight of the Latin American economies," compose market analysts Dombusch and Edwards. "Inflationary upheavals, equalization of installments emergencies, and agonizing adjustment endeavors

The price of goods in dollar-equivalent pesos in Buenos Aires, the capital of the country, was significantly above that in New York City: taking the exchange rate, a product in Argentina was much more expensive than a product in New York City. With the exchange rate of Argentine austral at 10,000 to the dollar, people were able to purchase more goods, but when it renamed the currency to “peso” people were only able to buy less goods because prices remained high. Argentinean inflation remained higher than the U.S

In the past 20 years the Brazilian economy and government have overcome many difficult and major monetary problems. During the period of time from the 1980s to the 1990s Brazil experienced widespread inflation, leading to the devaluation of the Brazilian currency. This in turn hindered efforts at economic expansion and growth. The politicians and economists of the time did not know how to stop inflation from growing, and the GDP of Brazil in the 1990s fell by more than 80 percent, hitting an all-time low. In addition to monetary problems, like other South American countries Brazil was battling high rates of government corruption. In fact President Collor de Mello was impeached due to charges of corruption during September of 1992. Inflation was running very high in the midst of the 1990’s for Brazil and though many government leaders had promised to combat it since the 1980s, unfortunately their plans failed to work (The Real Plan, 2013, January 1). Thankfully, one man came up with the “Real Plan” which in fact worked and eliminated high inflation. After a successful recovery under the Real plan, Brazil would be hit in the future by two more economic crises: the South American economic crisis of 2002 and economic crisis of 2008, which had originated in the U.S. The economic crisis of 2008 was felt throughout the world, but thankfully Brazilian experience with the high inflation rates and economic crisis during the 1990’s helped them better prepare for the economic problems

In 1502 European sailors arrived ashore the Argentinean land during the Amerigo Vespucci voyage in 1502. A Spanish navigator named Juan Diaz de Solias visited Argentina during the year of 1516. The Spanish people created a permanent colony on the site of Buenos Aires in 1580, which was built overland and greatly resembled those built in Peru. From this established colony the regions of Rio de la Plata and Buenos Aires become the center of trade in Central America and throughout Europe. In the year of 1816 on July 9th the region of Buenos Aires would declare for their independence from Spanish opposition. After their victory over the Spanish, two groups would embark in lengthy conflicts between one another on who would/should control the region of Buenos Aires, and the two groups being the centralists and the federalists. These two groups thus combine to create the nation known to this day as Argentina finally establishing in the late 19th century finally agreeing on views. Foreigners investing into Argentina’s trade would add to a contribution of an economic revolution all throughout Argentina leading to the production of railroads and mass amounts of trade ports spreading all throughout the land of Argentina with the British being their primary and significant investor’s. Ever since these momentous events have occurred Argentina has grown to be one of the world’s top 10 richest and prosperous countries based off of their fast development of their agriculture and

Argentina’s turbulent history of economic crisis are often attributable to government mismanagement and fluctuating commodities prices, which have resulted in the millions to live below the poverty line. Repeated recessions of the 1970s and 1980s, the hyperinflation of 1989-90, the economic crisis of 2001. Argentina is a long way from the turmoil of 2001, but today’s mix of rising prices, wage pressures and the mistrust of the peso have prompted Argentineans to become overrun by a sense of nostalgia.1

In addition, in the decade leading to 1994, the government saw an increasing expenditure for various projects in the country. The result was an increased reduction in the funds of the government. Another more important factor was that the country experienced hyperinflation from 1985 through 1993. This period was also characterized by significant increases in debt loads of the financial sector, as well as the low oil prices that also contributed to the weakening of the Mexican economy (Mathur, 18). One would argue that the Mexican

Argentina is considered to be one of the wealthiest countries in Latin America with a Gross Domestic Product of about 540 billion in 2014, according to the World Bank. However, it hasn’t always been that way. Argentina has seen many periods of economic and political volatility ever since its independence from the Spanish Empire in 1816. From commodity based export booms in the 19th century to high inflation and debt defaults in the 20th century, Argentina is a country with a grim and daunting economic future. Many scholars have predicted that this is the evident fate of the Argentinean economy and that there is no way of digging themselves out of it. Argentina’s political economic history raises the concern of whether or not it is even

While the country economic progress has received international recognition, their development hasn’t been easy as it has faced major critical moments to their economic success. For example during the 1982 recession the gross domestic product dropped by 14.1 % which resulted to overvaluation of their currency which made the currency more vulnerable to harsh changes in international economy. This changes led to decrease in capital which decreased availability of finance meant to finance investments. According to Buchi this led to an increase in unemployment by 23% and decrease in salaries and wages by over 10% (Buchi 10). Years later Chile has been able to experience economic growth especially in the 1980s compared with other countries in South America who underwent similar crises.

With the large capital surplus largely arising from foreign investments to support the huge trade deficits in the Mexican current account, all seemed to go well for the Mexican economy until several political crises erupted and several macroeconomics mistakes were left exposed in 1994 which affected foreign investor’s confidence.