Argentine Monetary Policy
Many commentators blame Argentina’s current economic problems on its decision to peg the peso one-for-one to the U.S. dollar. This policy has caused the peso to appreciate on a real effective basis, eroding Argentina’s international competitiveness and weakening its economic growth. Without exchange rate flexibility, adjustment can come only through wage and price declines, which proceed slowly. Many believe that devaluing the peso could lift the country from its economic malaise, but devaluation could seriously scar Argentina’s credibility.
Suggested citation: "Argentine Monetary Policy," Federal Reserve Bank of Cleveland, Economic Trends, no. 01-12, pp. 08, 12.01.2001.