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SHORT- AND LONG-RUN EFFECTS OF DEVALUATIONS: EVIDENCE FROM ARGENTINA

Published online by Cambridge University Press:  21 March 2022

Luciano Campos*
Affiliation:
Universidad de Alcalá and RedNIEa

Abstract

Devaluations were traditionally considered to be expansionary in the short run and have no real long-run effects. Alternatively, some observers in developing countries found that devaluations were contractionary on impact, and that they might foster long-term growth. Using Argentina as a case study, which is convenient due to its long series availability and its subsequent switches in exchange rate regimes, four structural shocks are identified in line with the traditional and alternative views. It is found that devaluations were mostly contractionary, and that real long-run effects were only possible when inflation was either low or moderate. In light of the estimates, a historical revision of Argentinean devaluation episodes from 1854 to 2018 has been carried out.

Resumen

RESUMEN

Tradicionalmente se consideraba que las devaluaciones eran expansivas a corto plazo y no tenían efectos reales a largo plazo. Por otra parte, algunos observadores de países en desarrollo encontraron que las devaluaciones eran contractivas y que podían fomentar el crecimiento a largo plazo. Tomando a Argentina como caso de estudio, lo cual es conveniente por su disponibilidad de series largas y sus subsecuentes cambios en los regímenes cambiarios, se identifican cuatro choques estructurales en línea con las visiones tradicionales y alternativas. Se encuentra que las devaluaciones fueron mayoritariamente contractivas y que los efectos reales a largo plazo solo fueron posibles cuando la inflación fue baja o moderada. A la luz de estos resultados, se realiza una revisión histórica de las devaluaciones argentinas de 1854 a 2018.

Type
Articles/Artículos
Copyright
Copyright © The Author(s), 2022. Published by Cambridge University Press on behalf of Instituto Figuerola, Universidad Carlos III de Madrid

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Footnotes

a

Departamento de Economía, Alcala de Henares, Spain. luciano.campos@uah.es

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