Exchange and monetary policy after the Convertibility collapse

Abstract

This article aims to contribute to the debate on the exchange rate policy consisting of preserving a competitive and stable real exchange rate (CSRER) observed in Argentina after the Convertibility collapse at the end of 2001. This policy led to the reversal of the current account deficit, mainly through the generation of significant trade surpluses. Its favorable effects did not end in the external sector. The maintenance of a CSRER played a leading role in the rapid growth of GDP, by stimulating the activity of the tradable sectors. Despite these achievements, CSRER policy has not been without criticism and debate. Many local and foreign analysts recognize the favorable effects on external accounts, growth and employment, but are skeptical regarding the possibility of maintaining it over time. Their objections point mainly to alleged inconsistencies in the management of monetary and exchange policies in a context of international financial integration.

JEL classification: E52 ; F31 ; F41