TY  - JOUR
AU  - Cumby,Robert E.
AU  - Wijnbergen,Sweder van
TI  - Finanial Policy and Speculative Runs with a Crawling Peg:  Argentina 1979-1981
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2376
PY  - 1987
Y2  - August 1987
UR  - http://www.nber.org/papers/w2376
L1  - http://www.nber.org/papers/w2376.pdf
N1  - Author contact info:
Robert E. Cumby
Georgetown University
School of Foreign Service
Washington, DC 20057-1045
Tel: 202/687-2990
Fax: 202/687-6102
E-Mail: cumbyr@georgetown.edu

Sweder van Wijnbergen
E-Mail: svw.heas@planet.nl
AB  - In this paper we present a model of a balance-of-payments crisis and use it to examine the Argentine experiment with a crawling peg between December 1978 and February 1981. The approach taken allows us to examine the evolution of a crisis when the collapse is not a perfectly-foreseen event. The implementation of the model yields plausible values of the one-month ahead probabilities of a collapse of the crawling peg. The probabilities exhibit a sharp increase in the middle of 1980 and indicate a significant loss of credibility throughout the remainder of the year. The results suggest that viability of an exchange rate regime depends strongly on the domestic credit policy followed by the authorities. If this policy is not consistent with the exchange rate policy pursued by the authorities, confidence in the exchange rate policy is undermined.
ER  -