1 / 11

Stabilization

Stabilization. Importance of the Exchange Rate. Austral Plan. Heterodox Set wage-price-exchange rate controls To improve the budget Increased public sector prices Depreciated the exchange rate Imposed duties imports and export tariffs New Monetary unit was introduced: Austral.

felicia-beach
Télécharger la présentation

Stabilization

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Stabilization

  2. Importance of the Exchange Rate

  3. Austral Plan • Heterodox • Set wage-price-exchange rate controls • To improve the budget • Increased public sector prices • Depreciated the exchange rate • Imposed duties imports and export tariffs • New Monetary unit was introduced: Austral

  4. Performance: • Inflation decreased • Real output decreased • Real wages decreased • When price freeze was lifted prices increased • Real tax revenues decreased • Deficit increased • Loss of confidence • Crisis • From 1985 to 1986 annual inflation decreased from 672.5 to 85.7 • By 1989 annual inflation was 3,080.5

  5. In 1989 Menem assumes the Presidency • Fiscal restraint • Prices of public services increased • Taxes increased • Deficit decreased • Inflation went from 2,314.7 in 1990 to -0.7 in 2000 • 1999-2002 Economic crisis • 1999 real GDP decreased • Were not willing to devalue the currency • Capital flight • 2001 Argentina declares a moratorium • IMF bailout

  6. Brazil • Heterodox • In 1986 the “Cruzado Plan” was adopted • General price freeze • Partial freeze on wages • Exchange rate fixed at 13.8 • A new currency was adopted, the Cruzado • Performance: Dramatic decreased in inflation • From 226 in early 1985 to 0.6 by early 1986

  7. However: • Deficit increased • Loss confidence • Inflation back to 394.6 by 1987 and up to 2,489 by 1993 • A new plan was adopted: the Real • Mix of heterodox and orthodox plan • Fiscal adjustment • Indexation of prices • Adoption of a new currency, the Real • Inflation decreased to 5.3 by 2000

More Related