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

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18 Scopus citations

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)
Pages (from-to)S117-S130
JournalJournal of International Money and Finance
Volume5
Issue numberSUPPL. 1
DOIs
StatePublished - Mar 1986
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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