Abstract
In March 1981 the Viola government took over an economy that had already for five years been in the process of stabilisation. Economy Minister Martínez de Hoz had attempted stabilisation in 1976–8 with non-market approaches. However, this did not succeed and he therefore moved in December 1978 to an alternative that turned out to be quite destructive — the Plan of 20 December. The plan fought inflation by prefixed exchange rates, using the influence of stabilised declining import price inflation to bring down inflationary expectations and to reduce directly the rate of inflation. Concurrent commercial liberalisation was expected to reinforce the price discipline of the exchange rate scheme. At the same time the economy was opened wide to international capital flows (see Fernández, 1983; Fernández and Rodríguez, 1982; and Dagnino Pastore, 1983).
This article was written in October 1984 and refers to events that were contemporary but that have unfolded since, in ways that are glimpsed in the postscript. Financial support was provided by a grant from the National Science Foundation. I am indebted to Eduardo Borensztein, Domingo Cavallo, Graciela Kaminsky and Luis Radinea for generous help with the facts. José María Dagnino Pastore bears responsibility for interesting me in Argentine policy problems.
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© 1989 Guido di Tella and Rudiger Dornbusch
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Dornbusch, R., Iglesias, F.H. (1989). Argentina after Martínez de Hoz, 1981–3. In: di Tella, G., Dornbusch, R. (eds) The Political Economy of Argentina, 1946–83. St Antony’s/Macmillan Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-09511-7_13
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