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Latin America: Lessons of the Debt Crisis

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The speakers at the conference included Luis Bértola, from the Universidad de la República, Uruguay, and José Antonio Ocampo, from Columbia University, who gave an introductory presentation on ‘Latin America’s debt crisis and the “lost decade”‘, Carlos Eduardo Freitas, former executive director of Brazil’s Central Bank, who spoke on ‘The Brazilian experience – the Crash of 1982’, and Stephany Griffith-Jones who spoke on the Brady Plan.

Because of the current controversy on how Greece should handle its huge debts, the Argentine experience of default in 2001 is particularly relevant. In his presentation entitled ‘The Argentine Foreign Debt Default and Restructuring’, Roberto Frenkel from CEDES in Buenos Aires began by questioning some of the assumptions made about the Argentine default. For instance, he was critical of the argument ‘that takes the Argentine case as an example of how uncontrolled public spending was the main cause of the crisis and default. This is probably the most common, yet false, image of the Argentine case.’ And again: ‘We also question the view that the default was the main factor responsible for Argentina’s deep economic crisis in the early part of the twenty first century and its high social cost.’

Frenkel’s main conclusion was emphatic: ‘However, the most important effect of the default and the end of the convertibility regime was regaining the instruments of macroeconomic policy. This was of crucial importance in moving the economy out of the abysmal situation generated by the agony and the final collapse of the convertibility regime.’ Food for thought, indeed, for those following the apparently intractable crisis in Greece.

The conference papers can be accessed here.

 

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