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Inflation and Currency Depreciation in Argentina - A Historical Institutional Perspective on Inflation in Argentina

Andersson, Fritjof LU (2024) EKHK18 20241
Department of Economic History
Abstract
Argentina, once among the world's wealthiest nations, has since the 1950s experienced
economic turmoil marked by high inflation and currency depreciation. This thesis
investigates the historical factors contributing to Argentina's persistent issues with inflation,
with particular emphasis on the economic policies made since the 1940s. The study employs
a historical institutionalism framework, analysing key events from the middle of the 20th
century to the present, with the specific starting point of the election of Juan Domingo Perón
in 1946. The analysis reveals that Argentina's economic decline is closely linked to political
instability and the lack of central bank independence. Inconsistent economic policies and
reliance on... (More)
Argentina, once among the world's wealthiest nations, has since the 1950s experienced
economic turmoil marked by high inflation and currency depreciation. This thesis
investigates the historical factors contributing to Argentina's persistent issues with inflation,
with particular emphasis on the economic policies made since the 1940s. The study employs
a historical institutionalism framework, analysing key events from the middle of the 20th
century to the present, with the specific starting point of the election of Juan Domingo Perón
in 1946. The analysis reveals that Argentina's economic decline is closely linked to political
instability and the lack of central bank independence. Inconsistent economic policies and
reliance on printing money to address fiscal deficits has been detrimental to the Argentinian
economy. The thesis also includes a comparison with Brazil, which faced very similar
problems but managed to break their institutional path due to the Plano Real in 1994. The
plan included a multitude of institutional reforms and most importantly it made the Brazilian
central bank move towards independence. The conclusion of my thesis is that central bank
independence is the single most important factor for controlling inflation, and that is exactly
what Argentina has not had. Political control over the central bank has been prevalent during
the entire period studied. My study also shows the importance of reducing fiscal deficits, this
is to decrease the political pressure on the central banks. This can be done in multiple ways,
including decrease in public spending as well as attracting foreign direct investment (FDI). (Less)
Please use this url to cite or link to this publication:
author
Andersson, Fritjof LU
supervisor
organization
course
EKHK18 20241
year
type
M2 - Bachelor Degree
subject
keywords
Argentina, Inflation, Currency Depreciation, Central Bank Independence, Historical Institutionalism
language
English
id
9170101
date added to LUP
2024-07-12 11:11:18
date last changed
2024-07-12 11:11:18
@misc{9170101,
  abstract     = {{Argentina, once among the world's wealthiest nations, has since the 1950s experienced
economic turmoil marked by high inflation and currency depreciation. This thesis
investigates the historical factors contributing to Argentina's persistent issues with inflation,
with particular emphasis on the economic policies made since the 1940s. The study employs
a historical institutionalism framework, analysing key events from the middle of the 20th
century to the present, with the specific starting point of the election of Juan Domingo Perón
in 1946. The analysis reveals that Argentina's economic decline is closely linked to political
instability and the lack of central bank independence. Inconsistent economic policies and
reliance on printing money to address fiscal deficits has been detrimental to the Argentinian
economy. The thesis also includes a comparison with Brazil, which faced very similar
problems but managed to break their institutional path due to the Plano Real in 1994. The
plan included a multitude of institutional reforms and most importantly it made the Brazilian
central bank move towards independence. The conclusion of my thesis is that central bank
independence is the single most important factor for controlling inflation, and that is exactly
what Argentina has not had. Political control over the central bank has been prevalent during
the entire period studied. My study also shows the importance of reducing fiscal deficits, this
is to decrease the political pressure on the central banks. This can be done in multiple ways,
including decrease in public spending as well as attracting foreign direct investment (FDI).}},
  author       = {{Andersson, Fritjof}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Inflation and Currency Depreciation in Argentina - A Historical Institutional Perspective on Inflation in Argentina}},
  year         = {{2024}},
}