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Argentinean crisis 1999-2001 economic project

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Argentinean crisis 1999-2001 economic project
Argentinean Crisis 1999 – 2001 In 1999 – 2001, Argentina experienced one of the worst economic crises in their history. GDP output fell tremendously, inflation skyrocketed, high unemployment, the government default in its debt, the banking system was almost about to collapse, and the Argentine peso which was pegged at par with the US dollar, reached lows of Arg $3.90 per US dollar. This crisis had a major impact on the international economy as well. Countries that were investing in Argentina because of their stable economy and their peg with the US dollar, started to leave and to take all their money with them. Argentina is an interesting country to analyze because even though they are full of potential and have plenty of raw material to work with and export to the rest of the world, their politicians always find the way to create policies that instead of helping them, make it worst. In this paper we are going to analyze all the different policies that helped Argentina to come to this crisis, we are going to analyze the banking system, their reasons for defaulting on their debt, GDP output, inflation, and unemployment, the Argentine peso which was pegged to the US dollar and what policies they adopted to solve the crises.
Argentina’s Economy Minister Domingo Cavallo introduced the system of peso convertibility in 1991, which stated an exchange rate of one peso one dollar. This policy helped Argentina to bring inflation down from 84% in 1991 to 7.3% in 1993. With this rapid recover, Argentina was a model of successful economic reform to imitate. Their economy was stable and growing. Inflation was in single digits, output was growing tremendously, and the economy had managed to beat the Mexican Tequila crisis in the mid-1990s. Investors started to see good opportunities and foreign capital started to flow into the country, contributing to an acceleration of economic growth. Additionally, during 1997, Asia started with their crisis, which raised fear

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