To Fix or to Float? Argentina and Mexico
Argentina and Mexico provide an ongoing test of the relative merits of fixed and floating exchange rates. In the early 1990s, after years of hyperinflation, Argentina pegged its peso to the dollar and instituted a monetary arrangement—a currency board—that eliminated its ability to conduct a monetary policy independent of that adopted in the U.S. Inflation in Argentina fell quickly; in recent years, there has been virtually none.
Suggested citation: "To Fix or to Float? Argentina and Mexico," Federal Reserve Bank of Cleveland, Economic Trends, no. 00-04, pp. 19, 04.01.2000.