Boom, gloom, doom: Balance sheets, monetary fragmentation, and the politics of financial crisis in Argentina and Russia

Politics and Society

Volumn 33, Issue 1, 2005, Pages 3-45

  Woodruff, David M ^a  

^a NONE

Author keywords

Argentina; Exchange rates; Financial crisis; Money surrogates; Russia

Indexed keywords

EID: 14644389324     PISSN: 00323292     EISSN: None     Source Type: Journal    
DOI: 10.1177/0032329204272550     Document Type: Review

References (204)

1. For an exhaustive survey of economists' models of the course of ERBS programs and their effects on real exchange rates and output, see Guillermo A. Calvo and Carlos A. Vegh, "Inflation, Stabilization, and BOP Crises in Developing Countries," working paper 6925 (Cambridge, Mass.: National Bureau of Economic Research, 1999).
2. Cf. Jeffry A. Frieden, "The Politics of Exchange Rates," in Mexico 1994: Anatomy of an Emerging-Market Crash, ed. Sebastian Edwards and Moisés Naím (Washington, D.C.: Carnegie Endowment for International Peace, 1997), 88; Calvo and Vegh, "Inflation, Stabilization, and BOP Crises in Developing Countries"; and Guillermo A. Calvo and Carlos A. Vegh, "Inflation Stabilization and Nominal Anchors," Contemporary Economic Policy 12, no. 2 (1994):35-45. My stylized depiction of this historical progression draws on these sources.
3. Cf. Jeffry A. Frieden, "The Politics of Exchange Rates," in Mexico 1994: Anatomy of an Emerging-Market Crash, ed. Sebastian Edwards and Moisés Naím (Washington, D.C.: Carnegie Endowment for International Peace, 1997), 88; Calvo and Vegh, "Inflation, Stabilization, and BOP Crises in Developing Countries"; and Guillermo A. Calvo and Carlos A. Vegh, "Inflation Stabilization and Nominal Anchors," Contemporary Economic Policy 12, no. 2 (1994):35-45. My stylized depiction of this historical progression draws on these sources.
4. Cf. Jeffry A. Frieden, "The Politics of Exchange Rates," in Mexico 1994: Anatomy of an Emerging-Market Crash, ed. Sebastian Edwards and Moisés Naím (Washington, D.C.: Carnegie Endowment for International Peace, 1997), 88; Calvo and Vegh, "Inflation, Stabilization, and BOP Crises in Developing Countries"; and Guillermo A. Calvo and Carlos A. Vegh, "Inflation Stabilization and Nominal Anchors," Contemporary Economic Policy 12, no. 2 (1994):35-45. My stylized depiction of this historical progression draws on these sources.
5. Key motivations for these capital flows include opportunities for interest-rate arbitrage built into the ERBS strategy and expectations of asset-price inflation. Anne O. Krueger, Nominal Anchor Exchange Rate Policies as a Domestic Distortion (Cambridge, Mass.: National Bureau of Economic Research, 1997); and Paul Krugman, "Dutch Tulips and Emerging Markets," Foreign Affairs 74, no. 4 (1995):28-44.
6. Key motivations for these capital flows include opportunities for interest-rate arbitrage built into the ERBS strategy and expectations of asset-price inflation. Anne O. Krueger, Nominal Anchor Exchange Rate Policies as a Domestic Distortion (Cambridge, Mass.: National Bureau of Economic Research, 1997); and Paul Krugman, "Dutch Tulips and Emerging Markets," Foreign Affairs 74, no. 4 (1995):28-44.
7. Milton Friedman, "The Case for Flexible Exchange Rates," in Milton Friedman, Essays in Positive Economics (Chicago: University of Chicago Press, 1953). For convenience, I use "peg" throughout as shorthand for any exchange-rate regime based on a preannounced parity or range of parities between the domestic currency and one or more international ones. For a typology of exchange-rate regimes, see Jeffrey A. Frankel, "No Single Currency Regime Is Right for All Countries or at All Times," working paper 7738 (Cambridge, Mass.: National Bureau of Economic Research, 1999).
8. Milton Friedman, "The Case for Flexible Exchange Rates," in Milton Friedman, Essays in Positive Economics (Chicago: University of Chicago Press, 1953). For convenience, I use "peg" throughout as shorthand for any exchange-rate regime based on a preannounced parity or range of parities between the domestic currency and one or more international ones. For a typology of exchange-rate regimes, see Jeffrey A. Frankel, "No Single Currency Regime Is Right for All Countries or at All Times," working paper 7738 (Cambridge, Mass.: National Bureau of Economic Research, 1999).
9. On "lock-in" effects, see Dani Rodrik, "The Rush to Free Trade in the Developing World: Why So Late? Why Now? Will It Last?" in Voting for Reform: Democracy, Political Liberalization, and Economic Adjustment, ed. Stephan Haggard and Steven B. Webb (New York: Oxford University Press, 1994), 83; and Paul Pierson, "The Path to European Integration: A Historical Institutionalist Analysis," Comparative Political Studies 29, no. 2 (1996): 123-63. On how transcurrency balance sheets (peso assets, dollar liabilities) can delay devaluation, see especially
10. On "lock-in" effects, see Dani Rodrik, "The Rush to Free Trade in the Developing World: Why So Late? Why Now? Will It Last?" in Voting for Reform: Democracy, Political Liberalization, and Economic Adjustment, ed. Stephan Haggard and Steven B. Webb (New York: Oxford University Press, 1994), 83; and Paul Pierson, "The Path to European Integration: A Historical Institutionalist Analysis," Comparative Political Studies 29, no. 2 (1996): 123-63. On how transcurrency balance sheets (peso assets, dollar liabilities) can delay devaluation, see especially
11. Hector E. Schamis, "Distributional Coalitions and the Politics of Economic Reform in Latin America," World Politics 51, no. 2 (1999):236-268; and Eugenio Diaz-Bonilla and Hector E. Schamis, "From Redistribution to Stability: The Evolution of Exchange Rate Policies in Argentina, 1950-98," in The Currency Game: Exchange Rate Politics in Latin America, ed. Jeffry A. Frieden and Ernesto Stein (Washington, D.C.: Inter-American Development Bank, 2001). Both papers deal with Argentina and stress how the currency board created a balance-sheet constituency. Other scholars who have noted such balance-sheet effects include Frieden, "The Politics of Exchange Rates"; Timothy P. Kessler, "Political Capital: Mexican Financial Policy under Salinas," World Politics 51, no. 1 (1998): 36-66; and Robert Wade, "Wheels within Wheels: Rethinking the Asian Crisis and the Asian Model," Annual Review of Political Science 3, no. 1 (2000): 85-115. Economic analyses of recent emerging-market crises, from a variety of perspectives, have also devoted much attention to transcurrency balance sheets. Lance Taylor, "Capital Market Crises: Liberalisation, Fixed Exchange Rates and Market-Driven Destabilisation," Cambridge Journal of Economics 22, no. 6 (1998): 663-676; Paul Krugman, "Balance Sheets, the Transfer Problem, and Financial Crises," in International Finance and Financial Crises: Essays in Honor of Robert P. Flood, Jr., ed. Robert P. Flood et al. (Boston: Kluwer Academic, 1999); and Michael Pettis, The Volatility Machine: Emerging Economies and the Threat of Financial Collapse (Oxford: Oxford University Press, 2001).
12. Hector E. Schamis, "Distributional Coalitions and the Politics of Economic Reform in Latin America," World Politics 51, no. 2 (1999):236-268; and Eugenio Diaz-Bonilla and Hector E. Schamis, "From Redistribution to Stability: The Evolution of Exchange Rate Policies in Argentina, 1950-98," in The Currency Game: Exchange Rate Politics in Latin America, ed. Jeffry A. Frieden and Ernesto Stein (Washington, D.C.: Inter-American Development Bank, 2001). Both papers deal with Argentina and stress how the currency board created a balance-sheet constituency. Other scholars who have noted such balance-sheet effects include Frieden, "The Politics of Exchange Rates"; Timothy P. Kessler, "Political Capital: Mexican Financial Policy under Salinas," World Politics 51, no. 1 (1998): 36-66; and Robert Wade, "Wheels within Wheels: Rethinking the Asian Crisis and the Asian Model," Annual Review of Political Science 3, no. 1 (2000): 85-115. Economic analyses of recent emerging-market crises, from a variety of perspectives, have also devoted much attention to transcurrency balance sheets. Lance Taylor, "Capital Market Crises: Liberalisation, Fixed Exchange Rates and Market-Driven Destabilisation," Cambridge Journal of Economics 22, no. 6 (1998): 663-676; Paul Krugman, "Balance Sheets, the Transfer Problem, and Financial Crises," in International Finance and Financial Crises: Essays in Honor of Robert P. Flood, Jr., ed. Robert P. Flood et al. (Boston: Kluwer Academic, 1999); and Michael Pettis, The Volatility Machine: Emerging Economies and the Threat of Financial Collapse (Oxford: Oxford University Press, 2001).
13. Hector E. Schamis, "Distributional Coalitions and the Politics of Economic Reform in Latin America," World Politics 51, no. 2 (1999):236-268; and Eugenio Diaz-Bonilla and Hector E. Schamis, "From Redistribution to Stability: The Evolution of Exchange Rate Policies in Argentina, 1950-98," in The Currency Game: Exchange Rate Politics in Latin America, ed. Jeffry A. Frieden and Ernesto Stein (Washington, D.C.: Inter-American Development Bank, 2001). Both papers deal with Argentina and stress how the currency board created a balance-sheet constituency. Other scholars who have noted such balance-sheet effects include Frieden, "The Politics of Exchange Rates"; Timothy P. Kessler, "Political Capital: Mexican Financial Policy under Salinas," World Politics 51, no. 1 (1998): 36-66; and Robert Wade, "Wheels within Wheels: Rethinking the Asian Crisis and the Asian Model," Annual Review of Political Science 3, no. 1 (2000): 85-115. Economic analyses of recent emerging-market crises, from a variety of perspectives, have also devoted much attention to transcurrency balance sheets. Lance Taylor, "Capital Market Crises: Liberalisation, Fixed Exchange Rates and Market-Driven Destabilisation," Cambridge Journal of Economics 22, no. 6 (1998): 663-676; Paul Krugman, "Balance Sheets, the Transfer Problem, and Financial Crises," in International Finance and Financial Crises: Essays in Honor of Robert P. Flood, Jr., ed. Robert P. Flood et al. (Boston: Kluwer Academic, 1999); and Michael Pettis, The Volatility Machine: Emerging Economies and the Threat of Financial Collapse (Oxford: Oxford University Press, 2001).
14. Hector E. Schamis, "Distributional Coalitions and the Politics of Economic Reform in Latin America," World Politics 51, no. 2 (1999):236-268; and Eugenio Diaz-Bonilla and Hector E. Schamis, "From Redistribution to Stability: The Evolution of Exchange Rate Policies in Argentina, 1950-98," in The Currency Game: Exchange Rate Politics in Latin America, ed. Jeffry A. Frieden and Ernesto Stein (Washington, D.C.: Inter-American Development Bank, 2001). Both papers deal with Argentina and stress how the currency board created a balance-sheet constituency. Other scholars who have noted such balance-sheet effects include Frieden, "The Politics of Exchange Rates"; Timothy P. Kessler, "Political Capital: Mexican Financial Policy under Salinas," World Politics 51, no. 1 (1998): 36-66; and Robert Wade, "Wheels within Wheels: Rethinking the Asian Crisis and the Asian Model," Annual Review of Political Science 3, no. 1 (2000): 85-115. Economic analyses of recent emerging-market crises, from a variety of perspectives, have also devoted much attention to transcurrency balance sheets. Lance Taylor, "Capital Market Crises: Liberalisation, Fixed Exchange Rates and Market-Driven Destabilisation," Cambridge Journal of Economics 22, no. 6 (1998): 663-676; Paul Krugman, "Balance Sheets, the Transfer Problem, and Financial Crises," in International Finance and Financial Crises: Essays in Honor of Robert P. Flood, Jr., ed. Robert P. Flood et al. (Boston: Kluwer Academic, 1999); and Michael Pettis, The Volatility Machine: Emerging Economies and the Threat of Financial Collapse (Oxford: Oxford University Press, 2001).
15. Hector E. Schamis, "Distributional Coalitions and the Politics of Economic Reform in Latin America," World Politics 51, no. 2 (1999):236-268; and Eugenio Diaz-Bonilla and Hector E. Schamis, "From Redistribution to Stability: The Evolution of Exchange Rate Policies in Argentina, 1950-98," in The Currency Game: Exchange Rate Politics in Latin America, ed. Jeffry A. Frieden and Ernesto Stein (Washington, D.C.: Inter-American Development Bank, 2001). Both papers deal with Argentina and stress how the currency board created a balance-sheet constituency. Other scholars who have noted such balance-sheet effects include Frieden, "The Politics of Exchange Rates"; Timothy P. Kessler, "Political Capital: Mexican Financial Policy under Salinas," World Politics 51, no. 1 (1998): 36-66; and Robert Wade, "Wheels within Wheels: Rethinking the Asian Crisis and the Asian Model," Annual Review of Political Science 3, no. 1 (2000): 85-115. Economic analyses of recent emerging-market crises, from a variety of perspectives, have also devoted much attention to transcurrency balance sheets. Lance Taylor, "Capital Market Crises: Liberalisation, Fixed Exchange Rates and Market-Driven Destabilisation," Cambridge Journal of Economics 22, no. 6 (1998): 663-676; Paul Krugman, "Balance Sheets, the Transfer Problem, and Financial Crises," in International Finance and Financial Crises: Essays in Honor of Robert P. Flood, Jr., ed. Robert P. Flood et al. (Boston: Kluwer Academic, 1999); and Michael Pettis, The Volatility Machine: Emerging Economies and the Threat of Financial Collapse (Oxford: Oxford University Press, 2001).
16. Hector E. Schamis, "Distributional Coalitions and the Politics of Economic Reform in Latin America," World Politics 51, no. 2 (1999):236-268; and Eugenio Diaz-Bonilla and Hector E. Schamis, "From Redistribution to Stability: The Evolution of Exchange Rate Policies in Argentina, 1950-98," in The Currency Game: Exchange Rate Politics in Latin America, ed. Jeffry A. Frieden and Ernesto Stein (Washington, D.C.: Inter-American Development Bank, 2001). Both papers deal with Argentina and stress how the currency board created a balance-sheet constituency. Other scholars who have noted such balance-sheet effects include Frieden, "The Politics of Exchange Rates"; Timothy P. Kessler, "Political Capital: Mexican Financial Policy under Salinas," World Politics 51, no. 1 (1998): 36-66; and Robert Wade, "Wheels within Wheels: Rethinking the Asian Crisis and the Asian Model," Annual Review of Political Science 3, no. 1 (2000): 85-115. Economic analyses of recent emerging-market crises, from a variety of perspectives, have also devoted much attention to transcurrency balance sheets. Lance Taylor, "Capital Market Crises: Liberalisation, Fixed Exchange Rates and Market-Driven Destabilisation," Cambridge Journal of Economics 22, no. 6 (1998): 663-676; Paul Krugman, "Balance Sheets, the Transfer Problem, and Financial Crises," in International Finance and Financial Crises: Essays in Honor of Robert P. Flood, Jr., ed. Robert P. Flood et al. (Boston: Kluwer Academic, 1999); and Michael Pettis, The Volatility Machine: Emerging Economies and the Threat of Financial Collapse (Oxford: Oxford University Press, 2001).
17. Hector E. Schamis, "Distributional Coalitions and the Politics of Economic Reform in Latin America," World Politics 51, no. 2 (1999):236-268; and Eugenio Diaz-Bonilla and Hector E. Schamis, "From Redistribution to Stability: The Evolution of Exchange Rate Policies in Argentina, 1950-98," in The Currency Game: Exchange Rate Politics in Latin America, ed. Jeffry A. Frieden and Ernesto Stein (Washington, D.C.: Inter-American Development Bank, 2001). Both papers deal with Argentina and stress how the currency board created a balance-sheet constituency. Other scholars who have noted such balance-sheet effects include Frieden, "The Politics of Exchange Rates"; Timothy P. Kessler, "Political Capital: Mexican Financial Policy under Salinas," World Politics 51, no. 1 (1998): 36-66; and Robert Wade, "Wheels within Wheels: Rethinking the Asian Crisis and the Asian Model," Annual Review of Political Science 3, no. 1 (2000): 85-115. Economic analyses of recent emerging-market crises, from a variety of perspectives, have also devoted much attention to transcurrency balance sheets. Lance Taylor, "Capital Market Crises: Liberalisation, Fixed Exchange Rates and Market-Driven Destabilisation," Cambridge Journal of Economics 22, no. 6 (1998): 663-676; Paul Krugman, "Balance Sheets, the Transfer Problem, and Financial Crises," in International Finance and Financial Crises: Essays in Honor of Robert P. Flood, Jr., ed. Robert P. Flood et al. (Boston: Kluwer Academic, 1999); and Michael Pettis, The Volatility Machine: Emerging Economies and the Threat of Financial Collapse (Oxford: Oxford University Press, 2001).
18. Jeffry A. Frieden, "Invested Interests: The Politics of National Economic Policies in a World of Global Finance," International Organization 45, no. 4 (1991): 425-451; Jeffry A. Frieden, "Exchange Rate Politics: Contemporary Lessons from American History," Review of International Political Economy 1, no. 1 (1994): 81-103; Jeffry A. Frieden, "Making Commitments: France and Italy in the European Monetary System, 1979-1985," in The Political Economy of European Monetary Unification, ed. Barry Eichengreen and Jeffry A. Frieden (Boulder, Colo.: Westview Press, 1994); Frieden, "The Politics of Exchange Rates"; Jeffry A. Frieden, "Monetary Populism in Nineteenth-Century America: An Open Economy Interpretation," Journal of Economic History 57, no. 2 (1997): 367-395; J. Lawrence Broz and Jeffry A. Frieden, "The Political Economy of International Monetary Relations," Annual Review of Political Science 4, no. 1 (2001): 317-343; Frieden and Stein, The Currency Game; and Jeffry A. Frieden, "Real Sources of European Currency Policy: Sectoral Interests and European Monetary Integration," International Organization 56, no. 4 (2002): 831-860.
19. Jeffry A. Frieden, "Invested Interests: The Politics of National Economic Policies in a World of Global Finance," International Organization 45, no. 4 (1991): 425-451; Jeffry A. Frieden, "Exchange Rate Politics: Contemporary Lessons from American History," Review of International Political Economy 1, no. 1 (1994): 81-103; Jeffry A. Frieden, "Making Commitments: France and Italy in the European Monetary System, 1979-1985," in The Political Economy of European Monetary Unification, ed. Barry Eichengreen and Jeffry A. Frieden (Boulder, Colo.: Westview Press, 1994); Frieden, "The Politics of Exchange Rates"; Jeffry A. Frieden, "Monetary Populism in Nineteenth-Century America: An Open Economy Interpretation," Journal of Economic History 57, no. 2 (1997): 367-395; J. Lawrence Broz and Jeffry A. Frieden, "The Political Economy of International Monetary Relations," Annual Review of Political Science 4, no. 1 (2001): 317-343; Frieden and Stein, The Currency Game; and Jeffry A. Frieden, "Real Sources of European Currency Policy: Sectoral Interests and European Monetary Integration," International Organization 56, no. 4 (2002): 831-860.
20. Jeffry A. Frieden, "Invested Interests: The Politics of National Economic Policies in a World of Global Finance," International Organization 45, no. 4 (1991): 425-451; Jeffry A. Frieden, "Exchange Rate Politics: Contemporary Lessons from American History," Review of International Political Economy 1, no. 1 (1994): 81-103; Jeffry A. Frieden, "Making Commitments: France and Italy in the European Monetary System, 1979-1985," in The Political Economy of European Monetary Unification, ed. Barry Eichengreen and Jeffry A. Frieden (Boulder, Colo.: Westview Press, 1994); Frieden, "The Politics of Exchange Rates"; Jeffry A. Frieden, "Monetary Populism in Nineteenth-Century America: An Open Economy Interpretation," Journal of Economic History 57, no. 2 (1997): 367-395; J. Lawrence Broz and Jeffry A. Frieden, "The Political Economy of International Monetary Relations," Annual Review of Political Science 4, no. 1 (2001): 317-343; Frieden and Stein, The Currency Game; and Jeffry A. Frieden, "Real Sources of European Currency Policy: Sectoral Interests and European Monetary Integration," International Organization 56, no. 4 (2002): 831-860.
21. Jeffry A. Frieden, "Invested Interests: The Politics of National Economic Policies in a World of Global Finance," International Organization 45, no. 4 (1991): 425-451; Jeffry A. Frieden, "Exchange Rate Politics: Contemporary Lessons from American History," Review of International Political Economy 1, no. 1 (1994): 81-103; Jeffry A. Frieden, "Making Commitments: France and Italy in the European Monetary System, 1979-1985," in The Political Economy of European Monetary Unification, ed. Barry Eichengreen and Jeffry A. Frieden (Boulder, Colo.: Westview Press, 1994); Frieden, "The Politics of Exchange Rates"; Jeffry A. Frieden, "Monetary Populism in Nineteenth-Century America: An Open Economy Interpretation," Journal of Economic History 57, no. 2 (1997): 367-395; J. Lawrence Broz and Jeffry A. Frieden, "The Political Economy of International Monetary Relations," Annual Review of Political Science 4, no. 1 (2001): 317-343; Frieden and Stein, The Currency Game; and Jeffry A. Frieden, "Real Sources of European Currency Policy: Sectoral Interests and European Monetary Integration," International Organization 56, no. 4 (2002): 831-860.
22. Jeffry A. Frieden, "Invested Interests: The Politics of National Economic Policies in a World of Global Finance," International Organization 45, no. 4 (1991): 425-451; Jeffry A. Frieden, "Exchange Rate Politics: Contemporary Lessons from American History," Review of International Political Economy 1, no. 1 (1994): 81-103; Jeffry A. Frieden, "Making Commitments: France and Italy in the European Monetary System, 1979-1985," in The Political Economy of European Monetary Unification, ed. Barry Eichengreen and Jeffry A. Frieden (Boulder, Colo.: Westview Press, 1994); Frieden, "The Politics of Exchange Rates"; Jeffry A. Frieden, "Monetary Populism in Nineteenth-Century America: An Open Economy Interpretation," Journal of Economic History 57, no. 2 (1997): 367-395; J. Lawrence Broz and Jeffry A. Frieden, "The Political Economy of International Monetary Relations," Annual Review of Political Science 4, no. 1 (2001): 317-343; Frieden and Stein, The Currency Game; and Jeffry A. Frieden, "Real Sources of European Currency Policy: Sectoral Interests and European Monetary Integration," International Organization 56, no. 4 (2002): 831-860.
23. Jeffry A. Frieden, "Invested Interests: The Politics of National Economic Policies in a World of Global Finance," International Organization 45, no. 4 (1991): 425-451; Jeffry A. Frieden, "Exchange Rate Politics: Contemporary Lessons from American History," Review of International Political Economy 1, no. 1 (1994): 81-103; Jeffry A. Frieden, "Making Commitments: France and Italy in the European Monetary System, 1979-1985," in The Political Economy of European Monetary Unification, ed. Barry Eichengreen and Jeffry A. Frieden (Boulder, Colo.: Westview Press, 1994); Frieden, "The Politics of Exchange Rates"; Jeffry A. Frieden, "Monetary Populism in Nineteenth-Century America: An Open Economy Interpretation," Journal of Economic History 57, no. 2 (1997): 367-395; J. Lawrence Broz and Jeffry A. Frieden, "The Political Economy of International Monetary Relations," Annual Review of Political Science 4, no. 1 (2001): 317-343; Frieden and Stein, The Currency Game; and Jeffry A. Frieden, "Real Sources of European Currency Policy: Sectoral Interests and European Monetary Integration," International Organization 56, no. 4 (2002): 831-860.
24. Jeffry A. Frieden, "Invested Interests: The Politics of National Economic Policies in a World of Global Finance," International Organization 45, no. 4 (1991): 425-451; Jeffry A. Frieden, "Exchange Rate Politics: Contemporary Lessons from American History," Review of International Political Economy 1, no. 1 (1994): 81-103; Jeffry A. Frieden, "Making Commitments: France and Italy in the European Monetary System, 1979-1985," in The Political Economy of European Monetary Unification, ed. Barry Eichengreen and Jeffry A. Frieden (Boulder, Colo.: Westview Press, 1994); Frieden, "The Politics of Exchange Rates"; Jeffry A. Frieden, "Monetary Populism in Nineteenth-Century America: An Open Economy Interpretation," Journal of Economic History 57, no. 2 (1997): 367-395; J. Lawrence Broz and Jeffry A. Frieden, "The Political Economy of International Monetary Relations," Annual Review of Political Science 4, no. 1 (2001): 317-343; Frieden and Stein, The Currency Game; and Jeffry A. Frieden, "Real Sources of European Currency Policy: Sectoral Interests and European Monetary Integration," International Organization 56, no. 4 (2002): 831-860.
25. Jeffry A. Frieden, "Invested Interests: The Politics of National Economic Policies in a World of Global Finance," International Organization 45, no. 4 (1991): 425-451; Jeffry A. Frieden, "Exchange Rate Politics: Contemporary Lessons from American History," Review of International Political Economy 1, no. 1 (1994): 81-103; Jeffry A. Frieden, "Making Commitments: France and Italy in the European Monetary System, 1979-1985," in The Political Economy of European Monetary Unification, ed. Barry Eichengreen and Jeffry A. Frieden (Boulder, Colo.: Westview Press, 1994); Frieden, "The Politics of Exchange Rates"; Jeffry A. Frieden, "Monetary Populism in Nineteenth-Century America: An Open Economy Interpretation," Journal of Economic History 57, no. 2 (1997): 367-395; J. Lawrence Broz and Jeffry A. Frieden, "The Political Economy of International Monetary Relations," Annual Review of Political Science 4, no. 1 (2001): 317-343; Frieden and Stein, The Currency Game; and Jeffry A. Frieden, "Real Sources of European Currency Policy: Sectoral Interests and European Monetary Integration," International Organization 56, no. 4 (2002): 831-860.
26. The difference here is indeed one of emphasis, since Frieden and his collaborators are quite aware that exchange rates also have distributive effects via their effect on financial asset values. See the references below.
27. For an earlier formulation of this approach to money, see David M. Woodruff, Money Unmade: Barter and the Fate of Russian Capitalism (Ithaca, N. Y.: Cornell University Press, 1999).
28. Weber, among many others, insisted on this financial character of capitalism. See Max Weber, Essays in Economic Sociology, ed. Richard Swedberg (Princeton, N.J.: Princeton University Press, 1999), 43.
29. L. Randall Wray, Understanding Modern Money: The Key to Full Employment and Price Stability (Northampton, Mass.: Edward Elgar, 1998); and Georg Friedrich Knapp, The State Theory of Money, abridged ed., trans. H. M. Lucas and J. Bonar (London: Macmillan, 1924).
30. L. Randall Wray, Understanding Modern Money: The Key to Full Employment and Price Stability (Northampton, Mass.: Edward Elgar, 1998); and Georg Friedrich Knapp, The State Theory of Money, abridged ed., trans. H. M. Lucas and J. Bonar (London: Macmillan, 1924).
31. For "relational context" see Margaret Somers, "Citizenship and the Place of the Public Sphere: Law, Community, and Political Culture in the Transition to Democracy," American Sociological Review 58, no. 5 (1993): 587-620.
32. The discussion of protection as a substitute for devaluation has a long history. See Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time, 2nd Beacon paperback ed. (Boston: Beacon Press, 2001); Rodrik, "The Rush to Free Trade"; and Beth A. Simmons, Who Adjusts? Domestic Sources of Foreign Economic Policy during the Interwar Years (Princeton, N.J.: Princeton University Press, 1994).
33. The discussion of protection as a substitute for devaluation has a long history. See Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time, 2nd Beacon paperback ed. (Boston: Beacon Press, 2001); Rodrik, "The Rush to Free Trade"; and Beth A. Simmons, Who Adjusts? Domestic Sources of Foreign Economic Policy during the Interwar Years (Princeton, N.J.: Princeton University Press, 1994).
34. The discussion of protection as a substitute for devaluation has a long history. See Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time, 2nd Beacon paperback ed. (Boston: Beacon Press, 2001); Rodrik, "The Rush to Free Trade"; and Beth A. Simmons, Who Adjusts? Domestic Sources of Foreign Economic Policy during the Interwar Years (Princeton, N.J.: Princeton University Press, 1994).
35. Woodruff, Money Unmade, 2.
36. Augusto De la Torre, Eduardo Levy Yeyati, and Sergio L. Schmukler, "Argentina's Financial Crisis: Floating Money, Sinking Banking," working paper (Washington, D.C.: World Bank, 2002), 15.
37. Broz and Frieden, "The Political Economy of International Monetary Relations," argue that the specificity of interests harmed by currency overvaluation makes it politically vulnerable; they note that these interests can pursue protectionist measures that can undermine exchange-rate policy. They also argue that those who benefit from currency overvaluation are too many and too diffuse to lobby for a nonexcludable public good. This ignores the fact that balance-sheet interests in currency overvaluation can be quite concentrated, self-aware, and influential, as demonstrated below.
38. Cf. Jeffry Frieden, Piero Ghezzi, and Ernesto Stein, "Politics and Exchange Rates: A Cross-Country Approach," The Currency Game 33, on "compensatory mechanisms."
39. These claims for theoretical advance, it will be noted, both amount to an assertion that the institutional-sociological theory brings certain phenomena into focus better than the alternative sectoral theory does. This is not to deny a fact I do my best to document: perspicacious advocates of the alternate approach have indeed noted some of these phenomena. However, the perspicacity of these scholars should not obscure the need for a theoretical approach that can build on such insights.
40. Frieden, "Invested Interests."
41. This refers to outward international investment; inward international investors are not discussed.
42. Broz and Frieden, "The Political Economy of International Monetary Relations," 319.
43. Ibid., 332.
44. Frieden, Ghezzi, and Stein, "Politics and Exchange Rates," 35.
45. Cf. the corporate finance notion of "capital structure," applied to exchange-rate crisis in Pettis, The Volatility Machine.
46. Such catastrophic scenarios are instances of "financial fragility." Hyman P. Minsky, Stabilizing an Unstable Economy (New Haven, Conn.: Yale University Press, 1986).
47. Minsky, Stabilizing an Unstable Economy, 197.
48. Frieden, "Invested Interests."
49. For a related point on how Frieden's sectoral analysis prompts arbitrary divisions between endogenous and nonendogenous, see Jeffrey A. Winters, "Power and the Control of Capital," World Politics 46, no. 3 (1994).
50. Frieden, "Making Commitments," 86.
51. For economists' discussions of the roots of nominal rigidity, see Alan S. Blinder, Asking about Prices: A New Approach to Understanding Price Stickiness (New York: Russell Sage Foundation, 1998); Truman F. Bewley, Why Wages Don't Fall during a Recession (Cambridge, Mass.: Harvard University Press, 2000); Robert J Shiller, "Public Resistance to Indexation: A Puzzle," Brookings Papers on Economic Activity no. 1 ( 1997); and Sujoy Mukerji and Jean-Marc Talion, Ambiguity Aversion and the Absence of Indexed Debt, Department of Economics Discussion Paper 28 (Oxford: University of Oxford, 2000).
52. For economists' discussions of the roots of nominal rigidity, see Alan S. Blinder, Asking about Prices: A New Approach to Understanding Price Stickiness (New York: Russell Sage Foundation, 1998); Truman F. Bewley, Why Wages Don't Fall during a Recession (Cambridge, Mass.: Harvard University Press, 2000); Robert J Shiller, "Public Resistance to Indexation: A Puzzle," Brookings Papers on Economic Activity no. 1 ( 1997); and Sujoy Mukerji and Jean-Marc Talion, Ambiguity Aversion and the Absence of Indexed Debt, Department of Economics Discussion Paper 28 (Oxford: University of Oxford, 2000).
53. For economists' discussions of the roots of nominal rigidity, see Alan S. Blinder, Asking about Prices: A New Approach to Understanding Price Stickiness (New York: Russell Sage Foundation, 1998); Truman F. Bewley, Why Wages Don't Fall during a Recession (Cambridge, Mass.: Harvard University Press, 2000); Robert J Shiller, "Public Resistance to Indexation: A Puzzle," Brookings Papers on Economic Activity no. 1 ( 1997); and Sujoy Mukerji and Jean-Marc Talion, Ambiguity Aversion and the Absence of Indexed Debt, Department of Economics Discussion Paper 28 (Oxford: University of Oxford, 2000).
54. For economists' discussions of the roots of nominal rigidity, see Alan S. Blinder, Asking about Prices: A New Approach to Understanding Price Stickiness (New York: Russell Sage Foundation, 1998); Truman F. Bewley, Why Wages Don't Fall during a Recession (Cambridge, Mass.: Harvard University Press, 2000); Robert J Shiller, "Public Resistance to Indexation: A Puzzle," Brookings Papers on Economic Activity no. 1 ( 1997); and Sujoy Mukerji and Jean-Marc Talion, Ambiguity Aversion and the Absence of Indexed Debt, Department of Economics Discussion Paper 28 (Oxford: University of Oxford, 2000).
55. Only the first of these appears to be an original proposal, though my terminology is new; cf. Blinder, Asking about Prices. What is novel about the analysis of the rest is organizing them as types of bargaining situations. This approach is inspired by American "legal realists" and (old) "institutional economists," who developed an enduringly valuable analysis of the importance of situating economic interactions in a bargaining context. See John Rogers Commons, Legal Foundations of Capitalism (Madison: University of Wisconsin Press, 1957); and Barbara Fried, The Progressive Assault on Laissez-Faire: Robert Hale and the First Law and Economics Movement (Cambridge, Mass.: Harvard University Press, 1998).
56. Only the first of these appears to be an original proposal, though my terminology is new; cf. Blinder, Asking about Prices. What is novel about the analysis of the rest is organizing them as types of bargaining situations. This approach is inspired by American "legal realists" and (old) "institutional economists," who developed an enduringly valuable analysis of the importance of situating economic interactions in a bargaining context. See John Rogers Commons, Legal Foundations of Capitalism (Madison: University of Wisconsin Press, 1957); and Barbara Fried, The Progressive Assault on Laissez-Faire: Robert Hale and the First Law and Economics Movement (Cambridge, Mass.: Harvard University Press, 1998).
57. Only the first of these appears to be an original proposal, though my terminology is new; cf. Blinder, Asking about Prices. What is novel about the analysis of the rest is organizing them as types of bargaining situations. This approach is inspired by American "legal realists" and (old) "institutional economists," who developed an enduringly valuable analysis of the importance of situating economic interactions in a bargaining context. See John Rogers Commons, Legal Foundations of Capitalism (Madison: University of Wisconsin Press, 1957); and Barbara Fried, The Progressive Assault on Laissez-Faire: Robert Hale and the First Law and Economics Movement (Cambridge, Mass.: Harvard University Press, 1998).
58. Such bond contracts are also enforced by law, but almost any bondholder would wish to have sold out before matters reach such a pass.
59. Cf. Kenneth Oye, "The Sterling-Dollar-Franc Triangle: Monetary Diplomacy 1929-1937," World Politics 38, no. 1 (1985): 173-199.
60. Frieden, "Real Sources of European Currency Policy," 839.
61. Rodrik, "The Rush to Free Trade," gives a rare discussion of the understudied issue of export barriers.
62. Polanyi, The Great Transformation, 241; for another example see the battle over the "scala mobile" in Italy: Frieden, "Making Commitments."
63. Polanyi, The Great Transformation, 241; for another example see the battle over the "scala mobile" in Italy: Frieden, "Making Commitments."
64. Bewley, Why Wages Don't Fall during a Recession. Other arguments on why individuals might prefer contracts defined in nominal terms rely on reasons for dissatisfaction with price indices. Mukerji and Tallon, Ambiguity Aversion and the Absence of Indexed Debt; and Shiller, "Public Resistance to Indexation."
65. Bewley, Why Wages Don't Fall during a Recession. Other arguments on why individuals might prefer contracts defined in nominal terms rely on reasons for dissatisfaction with price indices. Mukerji and Tallon, Ambiguity Aversion and the Absence of Indexed Debt; and Shiller, "Public Resistance to Indexation."
66. Bewley, Why Wages Don't Fall during a Recession. Other arguments on why individuals might prefer contracts defined in nominal terms rely on reasons for dissatisfaction with price indices. Mukerji and Tallon, Ambiguity Aversion and the Absence of Indexed Debt; and Shiller, "Public Resistance to Indexation."
67. On monetary surrogates as a way around nominal rigidity, see Woodruff, Money Unmade; William Tompson, "The Price of Everything and the Value of Nothing? Unravelling the Workings of Russia's 'Virtual Economy,' " Economy and Society 28, no. 2 (1999): 256-280; Andrei Aleksandrovich Iakovlev, "The Causes of Barter, Nonpayments, and Tax Evasion in the Russian Economy," Problems of Economic Transition 42, no. 11 (2000): 80-96; and De la Torre, Yeyati, and Schmukler, "Argentina's Financial Crisis."
68. On monetary surrogates as a way around nominal rigidity, see Woodruff, Money Unmade; William Tompson, "The Price of Everything and the Value of Nothing? Unravelling the Workings of Russia's 'Virtual Economy,' " Economy and Society 28, no. 2 (1999): 256-280; Andrei Aleksandrovich Iakovlev, "The Causes of Barter, Nonpayments, and Tax Evasion in the Russian Economy," Problems of Economic Transition 42, no. 11 (2000): 80-96; and De la Torre, Yeyati, and Schmukler, "Argentina's Financial Crisis."
69. On monetary surrogates as a way around nominal rigidity, see Woodruff, Money Unmade; William Tompson, "The Price of Everything and the Value of Nothing? Unravelling the Workings of Russia's 'Virtual Economy,' " Economy and Society 28, no. 2 (1999): 256-280; Andrei Aleksandrovich Iakovlev, "The Causes of Barter, Nonpayments, and Tax Evasion in the Russian Economy," Problems of Economic Transition 42, no. 11 (2000): 80-96; and De la Torre, Yeyati, and Schmukler, "Argentina's Financial Crisis."
70. On monetary surrogates as a way around nominal rigidity, see Woodruff, Money Unmade; William Tompson, "The Price of Everything and the Value of Nothing? Unravelling the Workings of Russia's 'Virtual Economy,' " Economy and Society 28, no. 2 (1999): 256-280; Andrei Aleksandrovich Iakovlev, "The Causes of Barter, Nonpayments, and Tax Evasion in the Russian Economy," Problems of Economic Transition 42, no. 11 (2000): 80-96; and De la Torre, Yeyati, and Schmukler, "Argentina's Financial Crisis."
71. Cf. Polanyi, The Great Transformation, 220.
72. A nominal appreciation has occurred when it takes fewer pesos to buy a dollar than previously; a real appreciation means that it takes fewer constant pesos (correcting for inflation) to buy a constant dollar than previously.
73. Calvo and Vegh, Inflation, Stabilization, and BOP Crises in Developing Countries; and Krueger, Nominal Anchor Exchange Rate Policies.
74. Calvo and Vegh, Inflation, Stabilization, and BOP Crises in Developing Countries; and Krueger, Nominal Anchor Exchange Rate Policies.
75. Krueger, Nominal Anchor Exchange Rate Policies.
76. Except as noted, figures cited in the text are from IMF, "International Financial Statistics Online," http://ifs.apdi.net/imf/.
77. These calculations, based on average yields and omission of transaction costs, are only indicative. Data from Central Bank of Russia, http://www.cbr.ru.
78. Homi Kharas, Brian Pinto, and Sergei Ulatov, "An Analysis of Russia's 1998 Meltdown: Fundamentals and Market Signals," Brookings Papers on Economic Activity no. 1 (2001), 19, and Sheila A. Chapman and Marcella Mulino, "Explaining Russia's Currency and Financial Crisis," MOCT-MOST: Economic Policy in Transitional Economies 11, no. 1 (2001): 4-6.
79. Homi Kharas, Brian Pinto, and Sergei Ulatov, "An Analysis of Russia's 1998 Meltdown: Fundamentals and Market Signals," Brookings Papers on Economic Activity no. 1 (2001), 19, and Sheila A. Chapman and Marcella Mulino, "Explaining Russia's Currency and Financial Crisis," MOCT-MOST: Economic Policy in Transitional Economies 11, no. 1 (2001): 4-6.
80. Chapman and Mulino, "Explaining Russia's Currency and Financial Crisis," 5-6; and Enrico Perotti, "Lessons from the Russian Meltdown: The Economics of Soft Legal Constraints," working paper (Amsterdam: University of Amsterdam, 2001).
81. Chapman and Mulino, "Explaining Russia's Currency and Financial Crisis," 5-6; and Enrico Perotti, "Lessons from the Russian Meltdown: The Economics of Soft Legal Constraints," working paper (Amsterdam: University of Amsterdam, 2001).
82. "Russia in the International Debt Markets: Here Comes the Russian Bond Wave," Euroweek, May 30, 1997.
83. "Forthcoming Issues: Russia and Her Regions Set to Dominate," Central European, April 10, 1998.
84. "Russia in the International Debt Markets."
85. Anders Åslund, How Russia Became a Market Economy (Washington, D.C.: Brookings Institution, 1995), 156-61; Tompson, "The Price of Everything"; and Clifford C. Gaddy and Barry W. Ickes, "Russia's Virtual Economy," Foreign Affairs 77, no. 5 (1998): 53-68.
86. Anders Åslund, How Russia Became a Market Economy (Washington, D.C.: Brookings Institution, 1995), 156-61; Tompson, "The Price of Everything"; and Clifford C. Gaddy and Barry W. Ickes, "Russia's Virtual Economy," Foreign Affairs 77, no. 5 (1998): 53-68.
87. Anders Åslund, How Russia Became a Market Economy (Washington, D.C.: Brookings Institution, 1995), 156-61; Tompson, "The Price of Everything"; and Clifford C. Gaddy and Barry W. Ickes, "Russia's Virtual Economy," Foreign Affairs 77, no. 5 (1998): 53-68.
88. David M. Woodruff, "It's Value That's Virtual: Rubles, Bartles, and the Place of Gazprom in the Russian Economy," Post-Soviet Affairs 15, no. 2 (1999): 130-148.
89. Woodruff, "It's Value That's Virtual."
90. Padma Desai, "Russa," in Going Global: Transition from Plan to Market in the World Economy, ed. Padma Desai (Cambridge, Mass.: MIT Press, 1997), 324.
91. Viz., oil companies' efforts to avoid higher depreciation allowances for equipment, which would have required charging higher prices to account for this "expense." "Press Conference of the Representatives of the Oil Companies Lukoil, Slavneft, Sidanko, Surgutneftegaz and Iukos," Federal News Service-Kremlin Package, February 8,1996.
92. Woodruff, "It's Value That's Virtual."
93. Desai, "Russa," 326; and Oleg D. Davydov, Inside Out: The Radical Transformation of Russian Foreign Trade, 1992-1997 (New York: Fordham University Press, 1998).
94. Desai, "Russa," 326; and Oleg D. Davydov, Inside Out: The Radical Transformation of Russian Foreign Trade, 1992-1997 (New York: Fordham University Press, 1998).
95. For overviews of exchange-rate policy see Diaz-Bonilla and Schamis, "From Redistribution to Stability"; Walter T. Molano, "Argentina: The Political Economy of Stabilization and Structural Reform," in The Political Economy of International Financial Crisis: Interest Groups, Ideologies, and Institutions, ed. Shale A. Horowitz and UK Heo (Lanham, Md.: Rowman & Littlefield, 2001); and Manuel Pastor Jr. and Carol Wise, "Stabilization and Its Discontents: Argentina's Economic Restructuring in the 1990s," World Development 27, no. 3 (1999): 411-503.
96. For overviews of exchange-rate policy see Diaz-Bonilla and Schamis, "From Redistribution to Stability"; Walter T. Molano, "Argentina: The Political Economy of Stabilization and Structural Reform," in The Political Economy of International Financial Crisis: Interest Groups, Ideologies, and Institutions, ed. Shale A. Horowitz and UK Heo (Lanham, Md.: Rowman & Littlefield, 2001); and Manuel Pastor Jr. and Carol Wise, "Stabilization and Its Discontents: Argentina's Economic Restructuring in the 1990s," World Development 27, no. 3 (1999): 411-503.
97. For overviews of exchange-rate policy see Diaz-Bonilla and Schamis, "From Redistribution to Stability"; Walter T. Molano, "Argentina: The Political Economy of Stabilization and Structural Reform," in The Political Economy of International Financial Crisis: Interest Groups, Ideologies, and Institutions, ed. Shale A. Horowitz and UK Heo (Lanham, Md.: Rowman & Littlefield, 2001); and Manuel Pastor Jr. and Carol Wise, "Stabilization and Its Discontents: Argentina's Economic Restructuring in the 1990s," World Development 27, no. 3 (1999): 411-503.
98. Diaz-Bonilla and Schamis, "From Redistribution to Stability."
99. Molano, "Argentina."
100. "La bonanza duró poco," Casas: Reporte Económico y Financiero, December 4, 1997.
101. Central Bank of Argentina, http://www.bcra.gov.ar.
102. Pastor and Wise, "Stabilization and Its Discontents," 481. On foreign investors as supporters of the strong peso due to their investment in nontradables, see Daniel Treisman, "Stabilization Tactics in Latin America," paper presented to the Annual Conference of the American Political Science Association, Boston, [August] 2002; note, however, that under fixed exchange rates these investors were supporters of inflation, not its opponents as Treisman suggests. It was devaluation, not inflation, to which they objected.
103. Pastor and Wise, "Stabilization and Its Discontents," 481.
104. IMF, "International Financial Statistics Online"; and Diaz-Bonilla and Schamis, "From Redistribution to Stability," 90.
105. IMF, "International Financial Statistics Online"; and Diaz-Bonilla and Schamis, "From Redistribution to Stability," 90.
106. Diaz-Bonilla and Schamis, "From Redistribution to Stability," 90; and Pastor and Wise, "Stabilization and Its Discontents," 487.
107. Diaz-Bonilla and Schamis, "From Redistribution to Stability," 90; and Pastor and Wise, "Stabilization and Its Discontents," 487.
108. Central Bank of Argentina.
109. Frieden and other scholars advancing deductive accounts of economic interests have often been criticized for failing to specify the process whereby these interests are articulated politically (see, for instance, Winters, "Power and the Control of Capital"). Such criticisms also apply to the present account, but perhaps with less force given that my point is merely that prodevaluation efforts would have faced an overwhelming coalitional challenge under any plausible account of interest group action in the two countries in question. On the difficulties of evaluating "pressure-group" accounts for exchange-rate politics, see Broz and Frieden, "The Political Economy of International Monetary Relations."
110. Frieden and other scholars advancing deductive accounts of economic interests have often been criticized for failing to specify the process whereby these interests are articulated politically (see, for instance, Winters, "Power and the Control of Capital"). Such criticisms also apply to the present account, but perhaps with less force given that my point is merely that prodevaluation efforts would have faced an overwhelming coalitional challenge under any plausible account of interest group action in the two countries in question. On the difficulties of evaluating "pressure-group" accounts for exchange-rate politics, see Broz and Frieden, "The Political Economy of International Monetary Relations."
111. Woodruff, Money Unmade, 110-76.
112. I b i d.
113. Central Bank of Russia.
114. Tompson, "The Price of Everything," surveys Russian price rigidity problems.
115. Vadim Bardin, "Valiutnyi koridor-96," Kommersant-Daily, December 1, 1995.
116. This and the following paragraph summarize Woodruff, Money Unmade, 163, and, more generally, 110-202.
117. "Se tensó otra vez la cadena de pagos," El Cronista, November 6, 2000.
118. "Edesur," IE1 Cronista, October 18, 2000.
119. Calculated from company annual reports at Emerging Markets Database, http:// www.securities.com.
120. Carlos Burgueño, "Darfan créditos para deudas impositivas," Ambito Financiero, November 11, 1999.
121. Daniel Azpiazu and Martin Schorr, "Desnaturalización de la Regulación Pública Y Ganacias Extraordinarias," Realidad Económica, no. 184 (2001): 73-95.
122. Roberto Navarro, "Las cuevas," Pdgina/12, March 4, 2001.
123. Ben Ross Schneider, "The State and Collective Action: The Politics of Organizing Business in Latin America," working paper (Chicago: Northwestern University, 2000).
124. Adrian Biglieri, "Crftico informe del G-8 contra Machinea," Ambito Financiero, December 20, 1999; Adrian Biglieri, "La UIA con excusa para salir del G-8," Ambito Financiero, May 31,1999; Santiago Magrone, "Ahora es la UIA la que está en crisis," El Cronista, August 23,1999; and David Cufré, "Guerra entre empresarios: Reaccion contra la UIA," Pdgina/12, September 7, 2000, 13.
125. Adrian Biglieri, "Crftico informe del G-8 contra Machinea," Ambito Financiero, December 20, 1999; Adrian Biglieri, "La UIA con excusa para salir del G-8," Ambito Financiero, May 31,1999; Santiago Magrone, "Ahora es la UIA la que está en crisis," El Cronista, August 23,1999; and David Cufré, "Guerra entre empresarios: Reaccion contra la UIA," Pdgina/12, September 7, 2000, 13.
126. Adrian Biglieri, "Crftico informe del G-8 contra Machinea," Ambito Financiero, December 20, 1999; Adrian Biglieri, "La UIA con excusa para salir del G-8," Ambito Financiero, May 31,1999; Santiago Magrone, "Ahora es la UIA la que está en crisis," El Cronista, August 23,1999; and David Cufré, "Guerra entre empresarios: Reaccion contra la UIA," Pdgina/12, September 7, 2000, 13.
127. Adrian Biglieri, "Crftico informe del G-8 contra Machinea," Ambito Financiero, December 20, 1999; Adrian Biglieri, "La UIA con excusa para salir del G-8," Ambito Financiero, May 31,1999; Santiago Magrone, "Ahora es la UIA la que está en crisis," El Cronista, August 23,1999; and David Cufré, "Guerra entre empresarios: Reaccion contra la UIA," Pdgina/12, September 7, 2000, 13.
128. They called for a labor reform that would preserve workers' rights but allow more temporary contracts. I thank Marcela Natalicchio for insight on this matter. A UIA cost study stated that businesses were spending more on services (including finance) than on wages (33 percent versus 20 percent of expenses). Maximiliano Montenegro, "Impuestos, salaries y servicios en costos empresarios: El peso de la boleta de servicios," Pdgina/12, October 11, 2000.
129. Adrián Biglieri, "La UIA ya tiene sus 10 mandamientos, "Ambito Financiero, October 8, 1999; Adrián Biglieri, "UIA presionará que se cree un ministerio de la producción," Ambito Financiero, May 5, 1999; Adrian Biglieri, "Definieron prórroga en el pago de la luz para PYMES," Ambito Financiero, August 15, 2000; Adrian Biglieri, "Machinea con medidas deficiles de aplicar quiere complacer a la UIA," Ambito Financiero, August 25, 2000; and "La UIA unifico su discurso. Fuerte reclame de reactivacion ahora la palabra la tiene Machinea," Página/12, June 23, 2000, 15.
130. Adrián Biglieri, "La UIA ya tiene sus 10 mandamientos, "Ambito Financiero, October 8, 1999; Adrián Biglieri, "UIA presionará que se cree un ministerio de la producción," Ambito Financiero, May 5, 1999; Adrian Biglieri, "Definieron prórroga en el pago de la luz para PYMES," Ambito Financiero, August 15, 2000; Adrian Biglieri, "Machinea con medidas deficiles de aplicar quiere complacer a la UIA," Ambito Financiero, August 25, 2000; and "La UIA unifico su discurso. Fuerte reclame de reactivacion ahora la palabra la tiene Machinea," Página/12, June 23, 2000, 15.
131. Adrián Biglieri, "La UIA ya tiene sus 10 mandamientos, "Ambito Financiero, October 8, 1999; Adrián Biglieri, "UIA presionará que se cree un ministerio de la producción," Ambito Financiero, May 5, 1999; Adrian Biglieri, "Definieron prórroga en el pago de la luz para PYMES," Ambito Financiero, August 15, 2000; Adrian Biglieri, "Machinea con medidas deficiles de aplicar quiere complacer a la UIA," Ambito Financiero, August 25, 2000; and "La UIA unifico su discurso. Fuerte reclame de reactivacion ahora la palabra la tiene Machinea," Página/12, June 23, 2000, 15.
132. Adrián Biglieri, "La UIA ya tiene sus 10 mandamientos, "Ambito Financiero, October 8, 1999; Adrián Biglieri, "UIA presionará que se cree un ministerio de la producción," Ambito Financiero, May 5, 1999; Adrian Biglieri, "Definieron prórroga en el pago de la luz para PYMES," Ambito Financiero, August 15, 2000; Adrian Biglieri, "Machinea con medidas deficiles de aplicar quiere complacer a la UIA," Ambito Financiero, August 25, 2000; and "La UIA unifico su discurso. Fuerte reclame de reactivacion ahora la palabra la tiene Machinea," Página/12, June 23, 2000, 15.
133. Adrián Biglieri, "La UIA ya tiene sus 10 mandamientos, "Ambito Financiero, October 8, 1999; Adrián Biglieri, "UIA presionará que se cree un ministerio de la producción," Ambito Financiero, May 5, 1999; Adrian Biglieri, "Definieron prórroga en el pago de la luz para PYMES," Ambito Financiero, August 15, 2000; Adrian Biglieri, "Machinea con medidas deficiles de aplicar quiere complacer a la UIA," Ambito Financiero, August 25, 2000; and "La UIA unifico su discurso. Fuerte reclame de reactivacion ahora la palabra la tiene Machinea," Página/12, June 23, 2000, 15.
134. For a summary of this set of ideas, though already under Cavallo, see Stanley Fischer, "Remarks to the Argentine Bankers Association," http://www.imf.org.
135. "Presión española al gobierno," Página/12, June 9, 2000,14.
136. César Illiano, "PYME: Podrán pagar la luz en cuotas," La Natión, September 2, 2000.
137. Institute de Estudios de las Finanzas Públicas Argentinas, "Pagos en especie: Experiencias zonales," http://www.iefpa.org.ar/ ix_encuentro_tecnico.htm; Justo L. Urbieta, "En Formosa, los morosos pagan con mercadería," La Nation-Economta, March 28, 2000; Julio Arceht, "La vuelta al trueque," Noticias y protagonistas, February 7, 2001; and "Los impuestos se podrán pagar mediante trueque," Criterios Tributarios-Edition Digital, January 2001.
138. Institute de Estudios de las Finanzas Públicas Argentinas, "Pagos en especie: Experiencias zonales," http://www.iefpa.org.ar/ ix_encuentro_tecnico.htm; Justo L. Urbieta, "En Formosa, los morosos pagan con mercadería," La Nation-Economta, March 28, 2000; Julio Arceht, "La vuelta al trueque," Noticias y protagonistas, February 7, 2001; and "Los impuestos se podrán pagar mediante trueque," Criterios Tributarios-Edition Digital, January 2001.
139. Institute de Estudios de las Finanzas Públicas Argentinas, "Pagos en especie: Experiencias zonales," http://www.iefpa.org.ar/ ix_encuentro_tecnico.htm; Justo L. Urbieta, "En Formosa, los morosos pagan con mercadería," La Nation-Economta, March 28, 2000; Julio Arceht, "La vuelta al trueque," Noticias y protagonistas, February 7, 2001; and "Los impuestos se podrán pagar mediante trueque," Criterios Tributarios-Edition Digital, January 2001.
140. Institute de Estudios de las Finanzas Públicas Argentinas, "Pagos en especie: Experiencias zonales," http://www.iefpa.org.ar/ ix_encuentro_tecnico.htm; Justo L. Urbieta, "En Formosa, los morosos pagan con mercadería," La Nation-Economta, March 28, 2000; Julio Arceht, "La vuelta al trueque," Noticias y protagonistas, February 7, 2001; and "Los impuestos se podrán pagar mediante trueque," Criterios Tributarios-Edition Digital, January 2001.
141. "Catamarca insólita: Circulan cinco monedas en la provincia," Ambito Financiero, December 4, 1999.
142. Laura Vales, "Sola négocia con el sector privado la aceptacion de los bonos polftica de seducción con el pátacon, " Página/12 July 23, 2001, 5.
143. Osvaldo Calello, "Buenos Aires empieza a pagar con cuenta gotas," El Cronista, Septembers, 2001.
144. De la Torre, Yeyati, and Schmukler, "Argentina's Financial Crisis," 15.
145. Sergei Aleksashenko, Bitva za rubl': Vzgliad uchastnika sobytii (Moscow: Alma Mater, 1999), 108; and Jacqueline Doherty, "Market Week: Turmoil Widens to Brazilian, Russian Bonds; East European Currencies Could Be Next," Barron 's, November 3, 1997.
146. Sergei Aleksashenko, Bitva za rubl': Vzgliad uchastnika sobytii (Moscow: Alma Mater, 1999), 108; and Jacqueline Doherty, "Market Week: Turmoil Widens to Brazilian, Russian Bonds; East European Currencies Could Be Next," Barron 's, November 3, 1997.
147. Aleksashenko, Bitva za rubl', 110; and Randall W. Stone, Lending Credibility: The International Monetary Fundandthe Post-Communist Transition (Princeton, N.J.: Princeton University Press, 2002), 151-52.
148. Aleksashenko, Bitva za rubl', 110; and Randall W. Stone, Lending Credibility: The International Monetary Fundandthe Post-Communist Transition (Princeton, N.J.: Princeton University Press, 2002), 151-52.
149. Central Bank of Russia; Aleksashenko, Bitva za rubl', 127; and Stone, Lending Credibility, 152.
150. Central Bank of Russia; Aleksashenko, Bitva za rubl', 127; and Stone, Lending Credibility, 152.
151. Central Bank of Russia; Aleksashenko, Bitva za rubl', 127; and Stone, Lending Credibility, 152.
152. Kharas, Pinto, and Ulatov, "An Analysis of Russia's 1998 Meltdown," is a good account.
153. Michael Mussa, "Argentina and the Fund: From Triumph to Tragedy," working paper (Washington, D.C.: Institute for International Economics, 2002), surveys events from the perspective of the IMF.
154. Thomas Catan, Stephen Fidler, and Peter Hudson, "Argentina Faces Up to Quandary over Its Creditors," Financial Times, May 16, 2001); and Walter T. Molano, What a Joke! report (Greenwich, Conn.: BCP Securities LLC, 2001).
155. Thomas Catan, Stephen Fidler, and Peter Hudson, "Argentina Faces Up to Quandary over Its Creditors," Financial Times, May 16, 2001); and Walter T. Molano, What a Joke! report (Greenwich, Conn.: BCP Securities LLC, 2001).
156. Joseph Kahn and Timothy L. O'Brien, "Easy Money: A Special Report; for Russia and Its U.S. Bankers, Match Wasn't Made in Heaven," New York Times, October 18,1998.
157. Mussa, "Argentina and the Fund."
158. "Markets Battle with Ruble Fears, Aid," Moscow Times, July 1, 1998.
159. Aleksashenko, Bitva za rubl', 188; and Kharas, Pinto, and Ulatov, "An Analysis of Russia's 1998 Meltdown," 54.
160. Aleksashenko, Bitva za rubl', 188; and Kharas, Pinto, and Ulatov, "An Analysis of Russia's 1998 Meltdown," 54.
161. Cynical explanations of delayed devaluation on such reasoning are quite common. For an example apropos of Mexico in 1994, see Andres Oppenheimer, Bordering on Chaos: Guerillas, Stockbrokers, Politicians, and Mexico 's Road to Prosperity (Boston: Little Brown, 1996), 219-34. For Russia in 1998, see for example Andrei Illarionov, "The Roots of the Economic Crisis," Journal of Democracy 10, no. 2 (1999); and Perotti, "Lessons from the Russian Meltdown."
162. Cynical explanations of delayed devaluation on such reasoning are quite common. For an example apropos of Mexico in 1994, see Andres Oppenheimer, Bordering on Chaos: Guerillas, Stockbrokers, Politicians, and Mexico 's Road to Prosperity (Boston: Little Brown, 1996), 219-34. For Russia in 1998, see for example Andrei Illarionov, "The Roots of the Economic Crisis," Journal of Democracy 10, no. 2 (1999); and Perotti, "Lessons from the Russian Meltdown."
163. Cynical explanations of delayed devaluation on such reasoning are quite common. For an example apropos of Mexico in 1994, see Andres Oppenheimer, Bordering on Chaos: Guerillas, Stockbrokers, Politicians, and Mexico 's Road to Prosperity (Boston: Little Brown, 1996), 219-34. For Russia in 1998, see for example Andrei Illarionov, "The Roots of the Economic Crisis," Journal of Democracy 10, no. 2 (1999); and Perotti, "Lessons from the Russian Meltdown."
164. Defenses of Russia's delayed devaluation that employ reasoning consistent with gambling for resurrection are Stone, Lending Credibility, 154, 156; and former U.S. Treasury Secretary Lawrence Summers's comments in Kharas, Pinto, and Ulatov, "An Analysis of Russia's 1998 Meltdown," 53. For a discussion of the concept in general, see George W. Downs and David M. Rocke, "Conflict, Agency, and Gambling for Resurrection: The Principal-Agent Problem Goes to War," American Journal of Political Science 38, no. 2 (1994): 68-82. I thank Jeffry Frieden for suggesting the relevance of this concept.
165. Defenses of Russia's delayed devaluation that employ reasoning consistent with gambling for resurrection are Stone, Lending Credibility, 154, 156; and former U.S. Treasury Secretary Lawrence Summers's comments in Kharas, Pinto, and Ulatov, "An Analysis of Russia's 1998 Meltdown," 53. For a discussion of the concept in general, see George W. Downs and David M. Rocke, "Conflict, Agency, and Gambling for Resurrection: The Principal-Agent Problem Goes to War," American Journal of Political Science 38, no. 2 (1994): 68-82. I thank Jeffry Frieden for suggesting the relevance of this concept.
166. Defenses of Russia's delayed devaluation that employ reasoning consistent with gambling for resurrection are Stone, Lending Credibility, 154, 156; and former U.S. Treasury Secretary Lawrence Summers's comments in Kharas, Pinto, and Ulatov, "An Analysis of Russia's 1998 Meltdown," 53. For a discussion of the concept in general, see George W. Downs and David M. Rocke, "Conflict, Agency, and Gambling for Resurrection: The Principal-Agent Problem Goes to War," American Journal of Political Science 38, no. 2 (1994): 68-82. I thank Jeffry Frieden for suggesting the relevance of this concept.
167. For such an argument, which implies this balance-sheet structure, see Pablo E Guidotti and Carlos A Vegh, "Losing Credibility: The Stabilization Blues," International Economic Review 40, no. 1 (1999): 23-51.
168. Illarionov, "The Roots of the Economic Crisis."
169. Sergei Aleksashenko et al., "Bankovskii krizis: Tuman rasseivaetsia?" Voprosy Ekonomiki, no. 5 (1999): 4-42, presents strong evidence of this unwinding.
170. Andrei Bagrov, "Chubais opiat' vernulsia," Kommersant, June 18, 1998.
171. Petr Sapozhnikov, "Oligarkhi protiv Prezidenta," Kommersant-Daily, July 23, 1998; "Krupneishie kompanii TEK opublikovali pis'mo rezkogo antipravitel'stvennogo soderzhaniia," WPS - TV and Radio Monitoring - Economics, July 24,1998; and Dmitrii Kuznets, "Neft" razdelilas' na fraktsii," Russkii Telegraf, July 23, 1998.
172. Petr Sapozhnikov, "Oligarkhi protiv Prezidenta," Kommersant-Daily, July 23, 1998; "Krupneishie kompanii TEK opublikovali pis'mo rezkogo antipravitel'stvennogo soderzhaniia," WPS - TV and Radio Monitoring - Economics, July 24,1998; and Dmitrii Kuznets, "Neft" razdelilas' na fraktsii," Russkii Telegraf, July 23, 1998.
173. Petr Sapozhnikov, "Oligarkhi protiv Prezidenta," Kommersant-Daily, July 23, 1998; "Krupneishie kompanii TEK opublikovali pis'mo rezkogo antipravitel'stvennogo soderzhaniia," WPS - TV and Radio Monitoring - Economics, July 24,1998; and Dmitrii Kuznets, "Neft" razdelilas' na fraktsii," Russkii Telegraf, July 23, 1998.
174. See for example "Joint Press Conference with Central Bank Chair Sergei Dubinin and Minister of Finance Mikhail Zadornov (RF Government House, 17:00, July 30, 1998)," Federal News Service - Kremlin Package, July 30, 1998.
175. Aleksandr Tatushkin, "My prishli izdat' predsmertnyi ston," Vremia MN, July 23, 1998. There is some evidence that energy-sector leaders privately counseled the government to choose a small devaluation at this point to avoid a larger one later. Andrei Bagrov, "Oligarkhi obsuzhdaiut deval'vatsiiu rublia," Kommersant, June 20, 1998; and Mikhail Khodorkovskii, "Krizis liberalizma v Rossii," Vedomosti, March 29, 2004. They did not make any public statements to this effect, however.
176. Aleksandr Tatushkin, "My prishli izdat' predsmertnyi ston," Vremia MN, July 23, 1998. There is some evidence that energy-sector leaders privately counseled the government to choose a small devaluation at this point to avoid a larger one later. Andrei Bagrov, "Oligarkhi obsuzhdaiut deval'vatsiiu rublia," Kommersant, June 20, 1998; and Mikhail Khodorkovskii, "Krizis liberalizma v Rossii," Vedomosti, March 29, 2004. They did not make any public statements to this effect, however.
177. Aleksandr Tatushkin, "My prishli izdat' predsmertnyi ston," Vremia MN, July 23, 1998. There is some evidence that energy-sector leaders privately counseled the government to choose a small devaluation at this point to avoid a larger one later. Andrei Bagrov, "Oligarkhi obsuzhdaiut deval'vatsiiu rublia," Kommersant, June 20, 1998; and Mikhail Khodorkovskii, "Krizis liberalizma v Rossii," Vedomosti, March 29, 2004. They did not make any public statements to this effect, however.
178. "Obrashchenie rukovoditelei 13 rossiiskikh neftianykh kompanii k Pravitel'stvu RF," RIA Oreanda - Economic News from Regions, October 6, 1998.
179. "Neftianiki protiv ogranichenii," Kortes - Oil and Gas Complex, October 23, 1999.
180. For assertions to this effect, see Perotti, "Lessons from the Russian Meltdown," 8; and Kharas, Pinto, and Ulatov, "An Analysis of Russia's 1998 Meltdown," 35.
181. For assertions to this effect, see Perotti, "Lessons from the Russian Meltdown," 8; and Kharas, Pinto, and Ulatov, "An Analysis of Russia's 1998 Meltdown," 35.
182. Aleksashenko, Bitva za rubl', 168.
183. For example, the remarks of Chubais in Evgeniia Al'bats, "Anatolii Chubais: Nas zhdut ochen' tiazhelye poltora-dva goda," Kommersant-Daily, September 8, 1998.
184. Government of Russia and Central Bank of Russia, "Memorandum of the Government of the Russian Federation and the Central Bank of the Russian Federation on Economic and Financial Stabilization Policies" July 16, 1998, http://www.imf.org/external/ np/loi/071698.HTM.
185. Aleksashenko, Bitva za rubl', 171.
186. Central Bank accounts for the period show no trace of the massive decrease in domestic money supply that should have accompanied the sale of billions of dollars in reserves. William Tompson, "The Bank of Russia and the 1998 Rouble Crisis," in Anatomy of the 1998 Russian Crisis, ed. V. I. Tikhomirov (Carlton, Australia: Contemporary Europe Research Centre, University of Melbourne, 1999); and Central Bank of Russia.
187. Central Bank of Russia.
188. A. Astapovich and D. Syrmolotov, "Rossiiskie banki v 1998 godu: Razvitie sistemnogo krizisa," Voprosy Ekonomiki, no. 5 (1999): 58nl9.
189. Evgeniia Al'bats, "Sergei Dubinin: My byli ne soglasny s pravitel'stvom," Kommersant-Daily, September 9, 1998.
190. Roberto Navarro, "Ni monedas," CASH-Suplemento Económico de Pdgina/12, October 28, 2001.
191. Angel Corragio, "El fondo patriótico no llega a los S1.000 milliones que pidió Cavallo," El Cronista, September 26, 2001. Notably, the international parent firms of these enterprises sought to cut themselves off from their Argentine subsidiaries' liabilities after devaluation, indicating that they might already have seen losses as capped before devaluation. Sonja Ryst, "Street Looks More Critically at Foreign-Owned Latin Cos," Dow Jones Energy Service, August 7, 2002.
192. Angel Corragio, "El fondo patriótico no llega a los S1.000 milliones que pidió Cavallo," El Cronista, September 26, 2001. Notably, the international parent firms of these enterprises sought to cut themselves off from their Argentine subsidiaries' liabilities after devaluation, indicating that they might already have seen losses as capped before devaluation. Sonja Ryst, "Street Looks More Critically at Foreign-Owned Latin Cos," Dow Jones Energy Service, August 7, 2002.
193. Central Bank of Argentina.
194. "Primeras fisuras en nuevo agrupamiento empresarial," Ambito Financiére, November 29, 2001.
195. For example, "Argentina's Cavallo Wants 'Expansive' Central Bank," Reuters News, April 6, 2001, 6:34 p.m. Cntrast this to Russia's secrecy on measures to loosen the money supply.
196. Government of Argentina, "Argentina: Letter of Intent, Memorandum of Economic Policies, Technical Memorandum of Understanding," August 30, 2001, http:// www.imf.org/external/np/loiy2001/arg/02/index.htm.
197. Frieden, "The Politics of Exchange Rates."
198. Wade, "Wheels within Wheels."
199. S. Brock Blomberg, Jeffry Frieden, and Ernesto Stein, "Sustaining Fixed Rates: The Political Economy of Currency Pegs in Latin America," working paper (Cambridge, Mass.: Harvard University, 2003).
200. IMF, "International Financial Statistics Online."
201. For skepticism on the product-market benefits of devaluation from one relevant policymaker see Aleksashenko, Bitva za rubl', 140.
202. Diaz-Bonilla and Schamis, "From Redistribution to Stability."
203. Black market rates were compiled from press accounts and should be taken only as indicative.
204. Barrington Moore, Soviet Politics: The Dilemma of Power, the Role of Ideas in Social Change (Cambridge, Mass.: Harvard University Press, 1950), 3.