The speculative attack on the peso and the real exchange rate: Argentina, 1979-1981

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Abstract

This article applies a speculative attack model to Argentina during its pre-announced exchange-rate system from January 1, 1979 to June 30, 1981. The model attempts to verify a rule whereby if domestic credit growth exceeds the rate of currency depreciation, two things occur: First, the domestic price of non-traded goods rises relative to the price of traded goods. Second, foreign reserves decline until a point when a sudden speculative attack depletes remaining reserves, causes a precipitous fall in the relative price of non-tradables, and forces the country onto a floating exchange-rate regime. In some important respects, the model captures the Argentinian experience, yet in other respects if fails to do so.

Original languageEnglish (US)
JournalJournal of International Money and Finance
Volume5
Issue numberSUPPL. 1
DOIs
StatePublished - Jan 1 1986
Externally publishedYes

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ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

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