Long-run fiscal dominance in Argentina, 1875–19901

María Gadea (), Marcela Sabate () and Isabel Sanz

Financial History Review, 2012, vol. 19, issue 3, 311-335

Abstract: For most of the twentieth century, Argentina solved the macroeconomic policy trilemma through domestic monetary sovereignty. This article illustrates how the need to finance deficits was behind Argentine sovereignty. We test the hypothesis of fiscal dominance between 1875 and the approval of the Austral Plan in 1991 and find that deficits drove money creation in the long run. The article also reveals how fiscal dominance, in a scenario of increasing currency substitution, helps to explain the dynamics of Argentine inflation in the second half of the twentieth century.

Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:cup:fihrev:v:19:y:2012:i:03:p:311-335_00

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