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N° 2003-01 |
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| January |
| Hyperinflation and the Reconstruction
of a National Money: Argentina and Brazil, 1990-2002 |
| Jérôme Sgard |
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| Under high inflation, money experiences a
process of institutional fragmentation: the unit of account and the unit of payment
are split and transferred on alternate supports, either a foreign currency as
for instance in Argentina, or domestic indices as in Brazil. Since the early 1970s',
this alternate options have had far-ranging consequences on stabilisation strategies,
on how monetary functions have then been re-integrated as on the overall quality
of monetary regulation, i.a. for macroeconomic management. This paper compares
the 1994 Brazilian Real Plan, which rebuilt a working, national monetary order,
and the bimonetary Argentine Currency Board regime. After the 1999 devaluation
in Brazil had demonstrated the resilience of the new money, un-pegging the Argentine
peso caused a major dislocation in 2002. 'Pesification' is then analysed as an
improvised attempt at rebuilding a single, national money. Surprising positive
results were observed as regard the price mechanism for labour and goods. Conversely,
'pesification' of financial contracts (deposits, credits, bonds, etc.) proved
a disaster : State intervention into private contracts, which was justified by
the presence of a valuable public good - money -, opened the way for a large-scale,
opaque redistribution of private wealth. This in turn raises the risks of a dangerous
weakening of the interaction rules between private and public spheres. |
Abstract |
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| Argentina, Brazil, Hyperinflation, Monetary
reform, Monetary functions |
Keywords |
| E31, E42, E65 |
JEL classification |
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