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Straining at the Anchor

The Argentine Currency Board and the Search for Macroeconomic Stability, 1880-1935

The "Argentine disappointment"—why Argentina persistently failed to achieve sustained economic stability during the twentieth century—is an issue that has mystified scholars for decades. In Straining the Anchor, Gerardo della Paolera and Alan M. Taylor provide many of the missing links that help explain this important historical episode. Written chronologically, this book follows the various fluctuations of the Argentine economy from its postrevolutionary volatility to a period of unprecedented prosperity to a dramatic decline from which the country has never fully recovered. The authors examine in depth the solutions that Argentina has tried to implement such as the Caja de Conversión, the nation’s first currency board which favored a strict gold-standard monetary regime, the forerunner of the convertibility plan the nation has recently adopted.

With many countries now using—or seriously contemplating—monetary arrangements similar to Argentina’s, this important and persuasive study maps out one of history’s most interesting monetary experiments to show what works and what doesn’t.

298 pages | 15 halftones, 29 line drawings, 39 tables | 6 x 9 | © 2001

National Bureau of Economic Research Series on Long-Term Factors in Economic Development

Economics and Business: Economics--History

History: Latin American History


Straining at the Anchor is more than a monetary history of Argentina up to the Great Depression. It clarifies specific problems that Argentina, as an open, peripheral economy, faced in a world of high capital mobility, and it addresses wider theoretical questions, such as the impact of the gold standard . . . and the importance of a nominal anchor in the monetary policies of developing countries.”

Klaus Veigel | Business History Review

“A wonderfully written book. A fascinating and insightful journey into one of the most interesting periods in Argentine economic history, when the world’s first full-fledged currency board was established.”

Pablo E. Guidotti, professor of economics, Universidad Torcuato Di Tella

“In this book, della Paolera and Taylor bridge the gap between monetary and growth economics, and between institutional and cliometric history. By showing how the current problems of today’s emerging markets can be viewed through the lens of their past, they pave the way for a new economic history of the developing world.”

Barry Eichengreen, professor of economics and political science, University of C

“Over the past century Argentina has been a monetary laboratory like no other; every conceivable experiment from hyperinflation to currency boards, from populism to depression orthodoxy has been practiced. Its astounding record is brilliantly diagnosed in this book. Far more than economic history, this is a treat in economics and a thorough analysis of economic policy.”

Rudi Dornbusch, professor of economics and international management, Massachuset

“Tracing the struggle for macroeconomic stability in Argentina from the world’s first emerging market crisis of 1891 to the Great Depression of the 1930s, this book offers a penetrating analysis of the strengths as well as the ultimately fatal flaws in Argentina’s financial architecture. The lessons for institutional design and contemporary policy in the small open economies of the developing world are clear and compelling.”

John H. Coatsworth, professor of history, Harvard University

Table of Contents

Part One: The Historical and Methodological Context
1. Introduction
2. Anchors Aweigh: The Drift Toward Crisis in the 1880s
Part Two: The Baring Crisis and Its Origins
3. A Monetary and Financial Wreck: The Baring Crisis, 1890-91
4. Collision Course: Macroeconomic Policies and the Crash
Part Three: The Making of the Belle époque
5. Relaunching the Gold Standard: From Monetary "Anemia" to "Plethora" and the Political Economy of Resumption, 1891-99
6. Calm Before a Storm: The Gold Standard During the Belle époque, 1899-1914
Part Four: The Travails of the Interwar Years
7. Distress Signals: Financial Fragility in the Interwar Period
8. Bailing Out: Internal versus External Convertibility
9. Steering Through the Great Depression: Institutions, Expectations, and the Change of Macroeconomic Regime
Part Five: Postscript
10. Postscript
Appendix 1. Histirical Statistics
Appendix 2. The Law of National Guaranteed Banks
Appendix 3. Money Supply Periodization, 1884-1913
Appendix 4. Money and Exchange Rates, 1884-1913
Appendix 5. Instituto Movilizador de Inversiones Bancarias
Appendix 6. Humor, Politics, and the Economy

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