Inflation, Financial Liberalisation and Bankruptcies in Argentina
In the mid-1970s, the Argentinian government embarked on a major programme of economic reform. The main elements of this reform programme were the liberalisation of domestic financial markets, the liberalisation of external trade and capital flows and to some extent the liberalisation of the domestic labour market. Prior to this the economy had been characterised by a high degree of protectionism and government intervention in the major areas of economic activity. The programme’s initial results were encouraging in that the growth rate of the economy increased, inflation was brought under control, the trade deficit was reduced and the fiscal deficit (although still high) also fell. However in the early 1980s Argentina, in common with Chile and Uruguay, which also implemented fairly similar programmes, was again in crisis, with all the main macroeconomic indicators worsening.
KeywordsExchange Rate Interest Rate Cash Flow Real Exchange Rate Real Interest Rate
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