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The Argentine Economic Crisis
By Ricardo Lopez Murphy, Daniel Artana, and Fernando Navajas
Introduction
The Argentine economy suffered a deep crisis during 2001 and 2002. Poverty stretched to one in every three homesteads in the suburbs of Buenos Aires, and the traumatic departure from convertibility, together with financial crisis and default (public debt default), undermined investor confidence, both local and foreign.
We believe the crisis owed its existence to four main causes: (1) inappropriate fiscal policy, (2) wage and price rigidities inconsistent with a fixed exchange regime, (3) a considerable, adverse external shock, and (4) political turmoil.
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