Roberto Frenkel

Five years of competitive and stable real exchange rate in Argentina, 2002–2007

We argue that the macroeconomic regime focused on the preservation of a stable and competitive real exchange rate (SCRER) has been a key factor explaining the rapid growth experienced in Argentina during 2002–2007. This policy promoted economic growth not only by preserving external and fiscal accounts sustainability, but also by providing incentives to the tradable sector and thus encouraging the expansion of its production, employment and investment. Monetary and exchange rate policies aimed at preserving a SCRER collide with conventional wisdom, particularly with the open economy trilemma. We argue that the critiques based on the trilemma may fail to hold in situations of excess supply of foreign currency and analyze the conditions under which the SCRER policy is sustainable.

An alternative to inflation targeting in Latin America: macroeconomic policies focused on employment

A fully opened capital account, a pure floating exchange rate, and inflation-targeting monetary policy is the macroeconomic setting currently recommended in Latin America by the International Monetary Fund and the orthodoxy. In this paper, we present an alternative macroeconomic regime proposal focused on growth and employment. A competitive real exchange rate, as an intermediate target, is an essential component of the regime. The paper argues in favor of the proposed policies by showing that they are viable and manageable and also discusses some possible objections from the mainstream or orthodox approach.

Mercado financiero, expectativas cambiarias y movimientos de capital

Aun considerada a la luz de la inestabilidad que se suele atribuir al comportamiento histórico de la economía argentina, la experiencia 1976-1981 se muestra de magnitud cataclísmica. Pocas dudas caben que los extraordinarios sucesos no se debieran a la acción incontrolada de las fuerzas de la naturaleza sino a las reformas institucionales y a las políticas económicas ejecutadas por las autoridades en ese período. Resultados y efectos tan marcados y de tan alto costo deberían inducir, a lo menos, una actitud de duda y una cuidadosa revisión crítica de los supuestos a hipótesis de las teorías y modelos que orientaron las políticas. Si bien se encuentran muestras de esta actitud, es chocante comprobar que está ausente en un significativo segmento del ámbito económico académico, particularmente en aquel que tiene mayor compromiso intelectual con las políticas desarrolladas. Esta característica puede hallarse, por ejemplo, en algunos trabajos recientes, que tienden a configurar una visión convencional sobre la experiencia argentina. La evaluación allí contenida se limita a atribuir los dramáticos resultados a errores a

From the Boom in Capital Inflows to Financial Traps

This chapter examines the performance of highly indebted countries that are linked with the international financial markets. The paths followed by some countries in the globalization process led to segmented integration. Persistently high country risk premiums place these countries in a financial trap, with high interest rates and low growth, vulnerability to contagion and other sources of volatility and the imposition of narrow limits to the degrees of freedom of economic policy. Domestic policies implemented during the process of financial integration account for most of the variation in the present situations of the different emergent markets. Although the analytical parts of this chapter do not refer specifically to Latin America the experiences of these regional emergent markets provide useful examples and historical background. Two reasons explain this focus. First, Latin American countries participated in the earliest stages of the financial globalization process in the late 1960s and early 1970s. Second, the most important cases of high indebtedness took place in this region. The chapter is divided into three sections. The first presents the historical background and briefly discusses domestic policies of the 1990s. The second section analyzes the links between individual countries and the international financial market and characterizes financial traps. Conclusions are presented in the third section.

Decisiones de precio en alta inflación

El tema central de este trabajo es el comportamiento empresarial de corto plazo en un contexto de alta incertidumbre. Proponemos para su analisis un modelo que incluye decisiones de precio, expectativas y riesgos. Nuestro interes por el tema esta en gran medida motivado por los procesos inflacionarios experimentados por las economias argentina y chilena en anos recientes. Ambas poseen una extensa historia inflacionaria -con tasas que cualquier patron de comparacion internacional juzgaria altas-, en cuyo desarrollo se encuentran varios periodos en los cuales la inflacion coincidio con caidas de la demanda efectiva y recesion de los niveles de actividad. Estos fenomenos nunca fueron facilmente asimilables por la teoria de la inflacion que debatia la literatura anglosajona, y dieron lugar a enfoques alternativos que podemos ubicar en las distintas variantes del estructuralismo latinoamericano. Aun en relacion a su propia historia, los procesos inflacionarios recientes de las economias argentina y chilena muestran rasgos sorprendentes. La generacion y persistencia en contextos recesivos de tasas de magnitud hiperinflacionaria son fenomenos que desafian la capacidad interpretativa de una enorme proporcion de las teorias de la inflacion. La experiencia no cuestiona solo la validez de una u otra teoria en tanto modelo

EXCHANGE RATE REGIMES IN THE MAJOR LATIN AMERICAN COUNTRIES SINCE THE 1950S: LESSONS FROM HISTORY *

The paper analyses exchange rate regimes implemented by the major Latin American (LA) countries since the 1950s, with special attention to the period beginning in the 1970s. The aim is to evaluate the relationship between exchange rate regimes and macroeconomic performance. After an overview of the main trends followed by the major LA countries over the last 60 years, the paper focusses on regimes that were implemented (1) with stabilisation purposes (nominal anchor) and (2) with the aim of targeting competitive and stable real exchange rates. These sections analyse in greater detail some important links between exchange rate regimes and macroeconomic performance. The paper closes with an assessment of the experiences with exchange rate regimes in LA.

Argentina: Growth resumption, sustainability, and environment

Abstract This paper analyzes the sustainability of the current growth process in Argentina, taking into account macroeconomic consistency and environmental constraints. The economy appears to be generating an unsustainable current account deficit and a relative price distortion in favor of nontradables, impeding a needed increase in exports. Resolution of the main environmental problems would absorb around 10% of savings over the next 10 years. The saving scarcity suggests that a gradualist policy giving priority to the urban environment should be implemented.

Las cuentas públicas y la crisis de la convertibilidad en argentina

Abstract En este trabajo se abordan dos tópicos centrales en las controversias acerca del régimen de convertibilidad establecido en la Argentina en 1991 y de su crisis, que alcanzó su desenlace a fines de 2001.

Heterodox theory and policy: The plan austral in Argentina

Abstract This paper analyses the initial Argentine macroeconomic conditions to which the Plan Austral responded, and then examines the three essential components of the Plan: a price freeze, fiscal adjustment and monetary reform. It concludes with an evaluation of the achievements of the Austral Plan.

Crecimiento economico en america latina: experiencia reciente y perspectivas

En este trabajo se evaluan las perspectivas de crecimiento de seis paises latinoamericanos representativos, a la luz de su desempeno economico en los ultimos tiempos. Los paises analizados son: Argentina, Brasil, Colombia, Chile, Mexico y Venezuela. Se resume el desempeno de cada pais, particularmente el referido al ano 1992, junto con los problemas mas importantes que surgieron en cada caso en lo atinente a la politica economica. Luego se examina la experiencia reciente poniendo el acento en las perspectivas de desarrollo de estos paises para el mediano plazo. La organizacion del articulo es la siguiente: en la primera seccion se expone una sintesis de las tendencias generales presentes en America Latina en 1992; en la segunda se analizan en forma separada los casos de los seis paises mencionados, y en la tercera se ofrece un panorama comparativo sobre todos ellos.