Argentina's Economic Reforms of the 1990s in Contemporary and Historical Perspective
Insider: the economy minister who built convertibility defending the record.
Summary
The reference has not verified this book in detail; the summary states only what the title, author and subject establish.
Cavallo served as Argentina's economy minister from 1991 to 1996, when he designed and implemented the convertibility regime, and again briefly in 2001 during the collapse. This volume presents his account and defence of the reforms, written with Sonia Cavallo Runde.
The reference has not verified the book's detailed contents. What the authorship establishes is the perspective: the architect of convertibility explaining what the programme was intended to do, what it achieved, and why he considers the collapse attributable to subsequent decisions rather than to the design.
The reforms covered include the Convertibility Law of 1991 fixing the peso to the dollar with reserve backing, which ended hyperinflation within months; the privatisation of state enterprises including telecommunications, energy, water and the airline; trade liberalisation and Mercosur; the deregulation of domestic markets; tax reform; and the partial privatisation of the pension system.
Cavallo's general position, stated in his subsequent writing, is that convertibility worked as designed, that the fiscal deficits of the later 1990s and particularly provincial spending undermined it, that the Brazilian devaluation of 1999 and dollar strength imposed an external shock the country could have absorbed with better fiscal policy, and that the 2001 and 2002 handling of the exit, including the deposit freeze and the asymmetric conversion of dollar contracts, caused damage beyond what was necessary.
Readers should treat this as the responsible official's defence and read it against Mussa's assessment and Blustein's account, both in this reference, and against the critics who hold that the regime was unsustainable by design.
Key takeaways 7
- The Convertibility Law fixed the peso to the dollar with reserve backing and ended hyperinflation within months.
- Privatisation of state enterprises transferred loss-making operations off the budget and attracted foreign investment.
- Cavallo attributes the collapse to fiscal deficits and provincial spending rather than to the exchange rate regime itself.
- The 1999 Brazilian devaluation and dollar strength imposed an external shock that better fiscal policy could have absorbed.
- The handling of the exit in 2001 and 2002 caused damage beyond what leaving the regime required.
- A currency board's credibility rests on the government's willingness to accept the fiscal discipline it implies.
- This is the architect's own defence and should be read against the assessments of those who judge the design unsustainable.
Who should read it
Readers studying the Argentine crisis who want the responsible minister's own account, read against the critical assessments.
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Where it sits in the reference 3
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