The Anatomy of a Multiple Crisis : Why Was Argentina Special and What Can We Learn from It?
The Argentine crisis has been variously blamed on fiscal imbalances, real overvaluation, and self-fulfilling investor pessimism triggering a capital flow reversal. The authors provide an encompassing assessment of the role of these and other ingred...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2003/06/2416987/anatomy-multiple-crisis-argentina-special-can-learn http://hdl.handle.net/10986/18175 |
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okr-10986-18175 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
AGGREGATE DEMAND ASYMMETRIC SHOCKS BALANCE OF PAYMENTS BALANCE SHEET BALANCE SHEETS BANKING SECTOR BANKING SYSTEM CAPACITY BUILDING CAPITAL ACCOUNT CAPITAL FLOW REVERSALS CAPITAL FLOWS CAPITAL GAINS CAPITAL INFLOWS CAPITAL MARKET CAPITAL REQUIREMENTS CD CLOSED ECONOMY CONSOLIDATION CURRENCY AREA CURRENCY BOARD CURRENT ACCOUNT CURRENT ACCOUNT BALANCE CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT SURPLUS DEBT DEBT RESTRUCTURING DEFLATION DEMAND DEPOSITS DEVALUATION ECONOMETRIC MODELS ECONOMIC CONTRACTION ECONOMIC GROWTH ECONOMIC IMPACT ECONOMIC PERFORMANCE ELASTICITY EMERGING ECONOMIES EMERGING MARKETS EQUILIBRIUM EXCHANGE RATE EXCHANGE RATE REGIME EXPORT MARKETS EXPORT PRICES EXPORTS EXTERNAL DEBT EXTERNAL ENVIRONMENT EXTERNAL FINANCIAL SHOCKS EXTERNAL SHOCKS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEM FISCAL POLICIES FISCAL POLICY FLEXIBLE EXCHANGE RATE FOREIGN ASSETS GINI COEFFICIENT GLOBAL FACTOR GLOBAL FACTORS GROWTH RATE IMPLICIT LIABILITIES IMPORTS INCOME DISTRIBUTION INCOME EFFECT INCOME ELASTICITY INTEREST RATE INTEREST RATES LABOR MARKET LIQUIDITY LOCAL CURRENCY LONG TERM MACROECONOMIC VOLATILITY MARKET CONFIDENCE MONETARY POLICY NOMINAL STABILITY OIL OPENNESS OVERVALUATION POLICY DECISIONS POLICY OPTIONS POLICY RESEARCH POLITICAL ECONOMY POVERTY REDUCTION PRIVATIZATION PRODUCTIVITY PRUDENTIAL REGULATIONS PUBLIC DEBT PUBLIC DEFICITS PUBLIC SECTOR REAL APPRECIATION REAL EXCHANGE REAL EXCHANGE RATE REAL GDP REAL INCOME RISK PREMIUM SOCIAL SECURITY STRUCTURAL REFORMS TERMS OF TRADE TERMS OF TRADE SHOCKS TRADE SHOCKS TRADE STRUCTURE TRADE VOLUME UNEMPLOYMENT UNEMPLOYMENT RATE WAGES ECONOMIC CRISIS BANKING SYSTEMS DEFLATION CAPITAL FLOWS EXTERNAL SHOCKS TRADE STRUCTURE ECONOMIC CRISIS WAGES |
| spellingShingle |
AGGREGATE DEMAND ASYMMETRIC SHOCKS BALANCE OF PAYMENTS BALANCE SHEET BALANCE SHEETS BANKING SECTOR BANKING SYSTEM CAPACITY BUILDING CAPITAL ACCOUNT CAPITAL FLOW REVERSALS CAPITAL FLOWS CAPITAL GAINS CAPITAL INFLOWS CAPITAL MARKET CAPITAL REQUIREMENTS CD CLOSED ECONOMY CONSOLIDATION CURRENCY AREA CURRENCY BOARD CURRENT ACCOUNT CURRENT ACCOUNT BALANCE CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT SURPLUS DEBT DEBT RESTRUCTURING DEFLATION DEMAND DEPOSITS DEVALUATION ECONOMETRIC MODELS ECONOMIC CONTRACTION ECONOMIC GROWTH ECONOMIC IMPACT ECONOMIC PERFORMANCE ELASTICITY EMERGING ECONOMIES EMERGING MARKETS EQUILIBRIUM EXCHANGE RATE EXCHANGE RATE REGIME EXPORT MARKETS EXPORT PRICES EXPORTS EXTERNAL DEBT EXTERNAL ENVIRONMENT EXTERNAL FINANCIAL SHOCKS EXTERNAL SHOCKS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEM FISCAL POLICIES FISCAL POLICY FLEXIBLE EXCHANGE RATE FOREIGN ASSETS GINI COEFFICIENT GLOBAL FACTOR GLOBAL FACTORS GROWTH RATE IMPLICIT LIABILITIES IMPORTS INCOME DISTRIBUTION INCOME EFFECT INCOME ELASTICITY INTEREST RATE INTEREST RATES LABOR MARKET LIQUIDITY LOCAL CURRENCY LONG TERM MACROECONOMIC VOLATILITY MARKET CONFIDENCE MONETARY POLICY NOMINAL STABILITY OIL OPENNESS OVERVALUATION POLICY DECISIONS POLICY OPTIONS POLICY RESEARCH POLITICAL ECONOMY POVERTY REDUCTION PRIVATIZATION PRODUCTIVITY PRUDENTIAL REGULATIONS PUBLIC DEBT PUBLIC DEFICITS PUBLIC SECTOR REAL APPRECIATION REAL EXCHANGE REAL EXCHANGE RATE REAL GDP REAL INCOME RISK PREMIUM SOCIAL SECURITY STRUCTURAL REFORMS TERMS OF TRADE TERMS OF TRADE SHOCKS TRADE SHOCKS TRADE STRUCTURE TRADE VOLUME UNEMPLOYMENT UNEMPLOYMENT RATE WAGES ECONOMIC CRISIS BANKING SYSTEMS DEFLATION CAPITAL FLOWS EXTERNAL SHOCKS TRADE STRUCTURE ECONOMIC CRISIS WAGES Perry, Guillermo Serven, Luis The Anatomy of a Multiple Crisis : Why Was Argentina Special and What Can We Learn from It? |
| geographic_facet |
Latin America & Caribbean ARGENTINA |
| relation |
Policy Research Working Paper;No. 3081 |
| description |
The Argentine crisis has been variously
blamed on fiscal imbalances, real overvaluation, and
self-fulfilling investor pessimism triggering a capital flow
reversal. The authors provide an encompassing assessment of
the role of these and other ingredients in the recent
macroeconomic collapse. They show that in the final years of
convertibility, Argentina was not hit harder than other
emerging markets in Latin America and elsewhere by global
terms-of-trade and financial disturbances. So the crisis
reflects primarily the high vulnerability to disturbances
built into Argentina's policy framework. Three key
sources of vulnerability are examined: the hard peg adopted
against optimal currency area considerations in a context of
wage and price inflexibility; the fragile fiscal position
resulting from an expansionary stance in the boom; and the
pervasive mismatches in the portfolios of banks'
borrowers. While there were important vulnerabilities in
each of these areas, neither of them was higher than those
affecting other countries in the region, and thus there is
not one obvious suspect. But the three reinforced each other
in such a perverse way that taken jointly they led to a much
larger vulnerability to adverse external shocks than in any
other country in the region. Underlying these
vulnerabilities was a deep structural problem of the
Argentine economy that led to harsh policy dilemmas before
and after the crisis erupted. On the one hand, the Argentine
trade structure made a peg to the dollar highly inconvenient
from the point of view of the real economy. On the other
hand, the strong preference of Argentinians for the dollar
as a store of value-after the hyperinflation and
confiscation experiences of the 1980s-had led to a highly
dollarized economy in which a hard peg or even full
dollarization seemed reasonable alternatives from a
financial point of view. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Perry, Guillermo Serven, Luis |
| author_facet |
Perry, Guillermo Serven, Luis |
| author_sort |
Perry, Guillermo |
| title |
The Anatomy of a Multiple Crisis : Why Was Argentina Special and What Can We Learn from It? |
| title_short |
The Anatomy of a Multiple Crisis : Why Was Argentina Special and What Can We Learn from It? |
| title_full |
The Anatomy of a Multiple Crisis : Why Was Argentina Special and What Can We Learn from It? |
| title_fullStr |
The Anatomy of a Multiple Crisis : Why Was Argentina Special and What Can We Learn from It? |
| title_full_unstemmed |
The Anatomy of a Multiple Crisis : Why Was Argentina Special and What Can We Learn from It? |
| title_sort |
anatomy of a multiple crisis : why was argentina special and what can we learn from it? |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2003/06/2416987/anatomy-multiple-crisis-argentina-special-can-learn http://hdl.handle.net/10986/18175 |
| _version_ |
1764439058933612544 |
| spelling |
okr-10986-181752021-04-23T14:03:41Z The Anatomy of a Multiple Crisis : Why Was Argentina Special and What Can We Learn from It? Perry, Guillermo Serven, Luis AGGREGATE DEMAND ASYMMETRIC SHOCKS BALANCE OF PAYMENTS BALANCE SHEET BALANCE SHEETS BANKING SECTOR BANKING SYSTEM CAPACITY BUILDING CAPITAL ACCOUNT CAPITAL FLOW REVERSALS CAPITAL FLOWS CAPITAL GAINS CAPITAL INFLOWS CAPITAL MARKET CAPITAL REQUIREMENTS CD CLOSED ECONOMY CONSOLIDATION CURRENCY AREA CURRENCY BOARD CURRENT ACCOUNT CURRENT ACCOUNT BALANCE CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT SURPLUS DEBT DEBT RESTRUCTURING DEFLATION DEMAND DEPOSITS DEVALUATION ECONOMETRIC MODELS ECONOMIC CONTRACTION ECONOMIC GROWTH ECONOMIC IMPACT ECONOMIC PERFORMANCE ELASTICITY EMERGING ECONOMIES EMERGING MARKETS EQUILIBRIUM EXCHANGE RATE EXCHANGE RATE REGIME EXPORT MARKETS EXPORT PRICES EXPORTS EXTERNAL DEBT EXTERNAL ENVIRONMENT EXTERNAL FINANCIAL SHOCKS EXTERNAL SHOCKS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEM FISCAL POLICIES FISCAL POLICY FLEXIBLE EXCHANGE RATE FOREIGN ASSETS GINI COEFFICIENT GLOBAL FACTOR GLOBAL FACTORS GROWTH RATE IMPLICIT LIABILITIES IMPORTS INCOME DISTRIBUTION INCOME EFFECT INCOME ELASTICITY INTEREST RATE INTEREST RATES LABOR MARKET LIQUIDITY LOCAL CURRENCY LONG TERM MACROECONOMIC VOLATILITY MARKET CONFIDENCE MONETARY POLICY NOMINAL STABILITY OIL OPENNESS OVERVALUATION POLICY DECISIONS POLICY OPTIONS POLICY RESEARCH POLITICAL ECONOMY POVERTY REDUCTION PRIVATIZATION PRODUCTIVITY PRUDENTIAL REGULATIONS PUBLIC DEBT PUBLIC DEFICITS PUBLIC SECTOR REAL APPRECIATION REAL EXCHANGE REAL EXCHANGE RATE REAL GDP REAL INCOME RISK PREMIUM SOCIAL SECURITY STRUCTURAL REFORMS TERMS OF TRADE TERMS OF TRADE SHOCKS TRADE SHOCKS TRADE STRUCTURE TRADE VOLUME UNEMPLOYMENT UNEMPLOYMENT RATE WAGES ECONOMIC CRISIS BANKING SYSTEMS DEFLATION CAPITAL FLOWS EXTERNAL SHOCKS TRADE STRUCTURE ECONOMIC CRISIS WAGES The Argentine crisis has been variously blamed on fiscal imbalances, real overvaluation, and self-fulfilling investor pessimism triggering a capital flow reversal. The authors provide an encompassing assessment of the role of these and other ingredients in the recent macroeconomic collapse. They show that in the final years of convertibility, Argentina was not hit harder than other emerging markets in Latin America and elsewhere by global terms-of-trade and financial disturbances. So the crisis reflects primarily the high vulnerability to disturbances built into Argentina's policy framework. Three key sources of vulnerability are examined: the hard peg adopted against optimal currency area considerations in a context of wage and price inflexibility; the fragile fiscal position resulting from an expansionary stance in the boom; and the pervasive mismatches in the portfolios of banks' borrowers. While there were important vulnerabilities in each of these areas, neither of them was higher than those affecting other countries in the region, and thus there is not one obvious suspect. But the three reinforced each other in such a perverse way that taken jointly they led to a much larger vulnerability to adverse external shocks than in any other country in the region. Underlying these vulnerabilities was a deep structural problem of the Argentine economy that led to harsh policy dilemmas before and after the crisis erupted. On the one hand, the Argentine trade structure made a peg to the dollar highly inconvenient from the point of view of the real economy. On the other hand, the strong preference of Argentinians for the dollar as a store of value-after the hyperinflation and confiscation experiences of the 1980s-had led to a highly dollarized economy in which a hard peg or even full dollarization seemed reasonable alternatives from a financial point of view. 2014-05-05T20:27:44Z 2014-05-05T20:27:44Z 2003-06 http://documents.worldbank.org/curated/en/2003/06/2416987/anatomy-multiple-crisis-argentina-special-can-learn http://hdl.handle.net/10986/18175 English en_US Policy Research Working Paper;No. 3081 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean ARGENTINA |