Do a comparative analysis of the Argentina peso crisis, Mexican peso crisis and Brazilian crisis. Draw parallels with the Zimbabwean Dollar crisis that spanned 1997 to 2009.
Economic crisis has been a common phenomenon all over the world in the past century. A country experiences a sudden down turn brought about by a financial crisis, financial assets lose a large part of their value, a falling GDP, drying up of liquidity, rising or falling of prices due to inflation or deflation all being common characteristics of an economic crisis which can take the form of a recession or a depression.
According to Dr. Tarek H. Selim in his research titled “A Comparative Essay on the Causes of Recent Financial Crises” Different financial crises arise due to different reasons. He affirmed that a specific financial crisis initially occurs due to specific market failures in specific sectors of the economy and then it may spread to other countries through contagion and other regional spill-over effects. He noted that three general forms of financial instability have constituted most forms of recent financial crises: (1) short term volatility, (2) medium term misalignments including excessive international capital flows, and (3) contagion.
We are going to analyse the Argentina peso crisis, Mexican peso crisis, Brazilian and the Zimbabwean Dollar crisis.
The Argentina peso crisis:
In 1998 Argentina entered a recession; by late 2001 the economy was in a full blown depression. According to the Wikipedia. The depression began due to the Russian and Brazilian financial crises and worsened after the dot-com bubble burst and it caused widespread unemployment, riots, the fall of the government, a default on the country’s foreign debt, the rise of alternative currencies and the end of the peso’s fixed exchange rate to the US dollar. The economy shrank by 28 percent and poverty was rife.
In a 2001 interview, journalist Peter Katel identified three factors, converging at "the worst possible time", to explain why the Argentine economy unraveled. Firstly the fixed exchange rate between Argentine peso and the US dollar (created at the start of the 1990s by
According to Dr. Tarek H. Selim in his research titled “A Comparative Essay on the Causes of Recent Financial Crises” Different financial crises arise due to different reasons. He affirmed that a specific financial crisis initially occurs due to specific market failures in specific sectors of the economy and then it may spread to other countries through contagion and other regional spill-over effects. He noted that three general forms of financial instability have constituted most forms of recent financial crises: (1) short term volatility, (2) medium term misalignments including excessive international capital flows, and (3) contagion.
We are going to analyse the Argentina peso crisis, Mexican peso crisis, Brazilian and the Zimbabwean Dollar crisis.
The Argentina peso crisis:
In 1998 Argentina entered a recession; by late 2001 the economy was in a full blown depression. According to the Wikipedia. The depression began due to the Russian and Brazilian financial crises and worsened after the dot-com bubble burst and it caused widespread unemployment, riots, the fall of the government, a default on the country’s foreign debt, the rise of alternative currencies and the end of the peso’s fixed exchange rate to the US dollar. The economy shrank by 28 percent and poverty was rife.
In a 2001 interview, journalist Peter Katel identified three factors, converging at "the worst possible time", to explain why the Argentine economy unraveled. Firstly the fixed exchange rate between Argentine peso and the US dollar (created at the start of the 1990s by