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1 Political Shocks and Asset Prices Daniel Carnahan
Political Shocks and Asset Prices Daniel Carnahan (Business Insider) Sebastian Saiegh (University of California San Diego) Abstract We estimate how asset prices respond to a range of political shocks, including changes in a country’s economic stewardship, national elections, coup d'états, wars, and terrorist attacks. Multiple instances of these events took place in Argentina between 1967 and 2020. Using an event study approach and over 13,000 daily prices from the Buenos Aires exchange, we find that stock-market volatility increases in the days immediately following unexpected, major policy- shifting events. These results hold irrespective of whether market returns are measured in nominal terms, in local consumption units, or in US dollars. Our analysis allows us to establish comparisons across different types of political shocks while avoiding the identification problems of multi-country event studies. The most significant increase in post-event risk is associated with irregular government turnovers (coup d'états, presidential death, resignations); approximately 100 percent on average, when returns are expressed in US dollars. Volatility also increases in the days immediately following a defeat in an international war, national elections and changes in the country’s economic stewardship. No changes in stock market volatility occur, however, after terrorist attacks or when the date of a new administration’s inauguration is publicly known and determined sufficiently far in advance. Word Count: 10,929 1 Introduction Investors concerned about non-commercial risks need to consider their exposure to political events that may affect the value of their assets. These political risks can originate in specific government actions, such as laws or regulations. -
Argentina: from Kirchner to Kirchner
ArgentinA: From Kirchner to Kirchner Steven Levitsky and María Victoria Murillo Steven Levitsky is professor of government at Harvard University. María Victoria Murillo is associate professor of political science and international affairs at Columbia University. Together they edited Ar- gentine Democracy: The Politics of Institutional Weakness (2005). Argentina’s 28 October 2007 presidential election contrasted sharply with the one that preceded it. The 2003 race took place in the after- math of an unprecedented economic collapse and the massive December 2001 protests that toppled two presidents in a span of ten days. That election—which was won by little-known (Peronist) Justicialist Party governor Néstor Kirchner—was held in a climate of political fragmenta- tion and uncertainty. Little uncertainty surrounded the 2007 campaign. After four years of strong economic growth, and with the opposition in shambles, a victory by the incumbent Peronists was a foregone conclu- sion. The only surprise was that Kirchner, who remained popular, chose not to seek reelection. Instead, his wife, Senator Cristina Fernández de Kirchner, ran in his place. Cristina Kirchner captured 45 percent of the vote, easily defeating Elisa Carrió of the left-of-center Civic Coalition (23 percent) and Kirch- ner’s former economics minister, Roberto Lavagna (17 percent), who was backed by the Radical Civic Union (UCR). In addition to winning more than three-quarters of Argentina’s 23 governorships, the Justicial- ist Party (PJ) and other pro-Kirchner allies won large majorities in both legislative chambers. In the Chamber of Deputies, the lower house of Argentina’s bicameral National Congress, progovernment Peronists and other Kirchner allies (including pro-Kirchner Radicals) won 160 of 257 seats, while dissident Peronists won another 10 seats. -
Argentina's Monetary and Exchange Rate Policies After the Convertibility
CENTER FOR ECONOMIC AND POLICY RESEARCH April Argentina’s Monetary and Exchange Rate Policies after the Convertibility Regime Collapse • ii Contents Introduction 1 1. The Convertibility Regime 2 2. The Post-Convertibility Macroeconomic Regime and Performance 9 2.1 The Main Characteristics of the Economic Recovery 10 2.2 The Evolution of Monetary and Exchange Rate Policies 16 3. A Macroeconomic Policy Regime with a SCRER as an Intermediate Target 25 3.1 The Orthodox Arguments Against RER Targeting 26 3.2 The Exchange Rate Policy 29 3.3 The Exchange Market and Capital Flows 30 3.4 Monetary Policy 31 Conclusion 35 References 36 Chronological Appendix 39 About the Authors Roberto Frenkel is a senior research associate at the Center for Economic and Policy Research in Washington, D.C. and Principal Research Associate at the Centro de Estudios de Estado y Sociedad (CEDES) in Buenos Aires, Argentina. Martín Rapetti is a research assistant at CEDES and a Ph.D. candidate at the University of Massachusetts, Amherst. Acknowledgements This paper was written as part of an international research project on Alternatives to Inflation Targeting for Stable and Equitable Growth co-directed by Gerald Epstein, PERI and Erinc Yeldan, Bilkent University. The authors thank the Rockefeller Brothers Fund, Ford Foundation and UN-DESA for financial support. Additionally, Nelson Barbosa-Filho, Erinc Yeldan and the participants in the workshop on “Alternatives to Inflation Targeting Monetary Policy for Stable and Egalitarian Growth in Developing Countries” held at CEDES in May 13-14, 2005 contributed comments to a previous version of this paper. Finally, the authors thank Julia Frenkel for her collaboration and Erinc Yeldan and an anonymous referee from World Development for their comments and suggestions. -
The Constitutionality of Bank Deposits Pesification, the Massa Case
Law and Business Review of the Americas Volume 14 Number 1 Article 4 2008 Bank Crisis in Argentina: The Constitutionality of Bank Deposits Pesification, the Massa Case Ignacio Hirigoyen Follow this and additional works at: https://scholar.smu.edu/lbra Recommended Citation Ignacio Hirigoyen, Bank Crisis in Argentina: The Constitutionality of Bank Deposits Pesification, the Massa Case, 14 LAW & BUS. REV. AM. 53 (2008) https://scholar.smu.edu/lbra/vol14/iss1/4 This Article is brought to you for free and open access by the Law Journals at SMU Scholar. It has been accepted for inclusion in Law and Business Review of the Americas by an authorized administrator of SMU Scholar. For more information, please visit http://digitalrepository.smu.edu. BANK CRISIS IN ARGENTINA: THE CONSTITUTIONALITY OF BANK DEPOSITS PESIFICATION, THE MASSA CASE Ignacio Hirigoyen* I. INTRODUCTION RGENTINA experienced its biggest bank crisis in history from 2000 to 2002. The financial crisis was so severe that it is re- garded as one of the most severe to ever occur during a peace- time period. At one point during such economic turmoil, Argentina went through five presidents in eight days. The fifth President, Eduardo Duhalde,1 declared a state of economic emergency 2 and made executive decisions, taking economic measures that were the source of much con- troversy and litigation. This paper will address the Massa case,3 which arose out of a challenge to the constitutionality of such executive deci- sions and went all the way through to Argentina's Corte Suprema de Jus- ticia de la Naci6n (Supreme Court). -
A R G E N T I
JUJUY PARAGUAY SALTA SOUTH FORMOSA Asunción PACIFIC TUCUMÁN CHACO SANTIAGO S OCEAN NE CATAMARCA SIO DEL ESTERO MI CORRIENTES á River an LA RIOJA Par BRAZIL SANTA FE SAN JUAN CÓRDOBA ENTRE RÍOS SAN LUIS URUGUAY MENDOZA Santiago Buenos Aires ARGENTINA Montevideo LA PAMPA BUENOS AIRES CHILE NEUQUÉN RÍO NEGRO SOUTH CHUBUT ATLANTIC OCEAN SANTA CRUZ Islas Malvinas TIERRA DEL FUEGO 0 200 miles david rock RACKING ARGENTINA opular protest erupted on the streets of Argentina through the hot December nights of 2001.1 Crowds from Pthe shanty towns attacked stores and supermarkets; banging their pots and pans, huge demonstrations of mainly middle- class women—cacerolazos—marched on the city centre; the piqueteros, organized groups of the unemployed, threw up road-blocks on high- ways and bridges. Twenty-seven demonstrators died, including five shot down by the police beneath the grand baroque façades of Buenos Aires’ Plaza de Mayo. The trigger for the fury had been the IMF’s suspension of loans to Argentina, on the grounds that President Fernando De la Rúa’s government had failed to meet its conditions on public-spending cuts. There was a run on the banks, as depositors rushed to get their money out and their pesos converted into dollars. De la Rúa’s Economy Minister Domingo Cavallo slapped on a corralito, a ‘little fence’, to limit the amount of cash that could be withdrawn—leaving many people’s savings trapped in failing banks. On December 20, as the protests inten- sified, De la Rúa resigned, his helicopter roaring up over the Rosada palace and the clouds of tear gas below. -
Argentina: Peronism Returns María Victoria Murillo, S.J
Argentina: Peronism Returns María Victoria Murillo, S.J. Rodrigo Zarazaga Journal of Democracy, Volume 31, Number 2, April 2020, pp. 125-136 (Article) Published by Johns Hopkins University Press For additional information about this article https://muse.jhu.edu/article/753199 [ Access provided at 9 Apr 2020 16:36 GMT with no institutional affiliation ] ARGENTINA: PERONISM RETURNS María Victoria Murillo and Rodrigo Zarazaga, S.J. María Victoria Murillo is professor of political science and interna- tional and public affairs and director of the Institute of Latin American Studies at Columbia University. Rodrigo Zarazaga, S.J., is director of the Center for Research and Social Action (CIAS) and researcher at the National Scientific and Technical Research Council (CONICET) in Buenos Aires. The headline news, the main takeaway, from Argentina’s 2019 gen- eral election is encouraging for democracy despite the dire economic situation. Mauricio Macri, a president not associated with the country’s powerful Peronist movement, became the first such chief executive to complete his mandate, whereas two non-Peronists before him had failed to do so.1 Macri would not repeat his term, however. He lost the 27 October 2019 election and then oversaw a peaceful handover of power to his Peronist rival, Alberto Fernández, who won by 48 to 40 percent and whose vice-president is former two-term president Cristina Fernán- dez de Kirchner (no relation). Strikingly, even the economic hard times gripping the country—they are the worst in two decades, and they sank Macri at the polls—could not ruffle the orderliness of the transition. Peaceful changes of administration tend to be taken for granted in democracies, but they are in fact major achievements anywhere. -
PRIMARY ELECTIONS Special Report
PRIMARY ELECTIONS Special Report WHAT IS AT STAKE? Provincial Elections President 24 130 National Representatives Provinces of Catamarca, Buenos Aires, and the City of Vicepresident National Senators Buenos Aires held primary elections to governor while Santa Cruz had general election. NATIONAL PROVISIONAL RESULTS OF THE PRIMARY ELECTIONS s 47.65% PARTICIPATION: 75,78% Alberto Fernández – Cristina Fernández de Kirchner 32.08% Mauricio Macri - Miguel Ángel Pichetto 8.22% Roberto Lavagna – Juan Manuel Urtubey 2.86% Nicolás del Caño – Romina del Pla 2.63% Juan J. Gómez Centurión – Cynthia Hotton 2.18% José Luis Espert – Luis Rosales ELECTORAL THRESHOLD 1.5% 0.71% Manuela Castañeira – Eduardo Mulhall 0.24% Alejandro Biondini – Enrique Venturino 0.14% Raul Albarracín – Sergio Pastore 0.13% José Antonio Romero Feris – Guillermo Sueldo POLITICAL SUPPORT KEYS #1 THE CENTER REGION VOTE #2 BUENOS AIRES SUPPORT #3 THE REST OF THE COUNTRY The National Government In the first section of the Other provinces, mainly driven expected to count with greater province of Buenos Aires, by the support of several support in Córdoba and Santa bastion of Cambiemos in 2015 Peronist governors, also added Fe, that along with Mendoza, and 2017, the officialism got an important part of votes that would provide a number of adverse results from expected summed up in the final result votes to face the tight scenario while in the other two -of an led Alberto Fernández to win in the province of Buenos Aires, average lower income-, the with several points ahead. but finally it turned the opposite Frente de Todos prevailed with way. -
The Current Argentine Inflation. the Need of an Heterodox Vision to Analyse Its Causes and Specificities
The current Argentine inflation. The need of an heterodox vision to analyse its causes and specificities. Julio Eduardo Fabris Pablo Julio Lopez José Villadeamigo 1. INTRODUCTION After the 2001 crisis that caused the financial default, the Argentina Republic is going through a high growth phase, driven specially by the agricultural and combustibles exports and, in lesser extend, by the imports substitution considering the peso devaluation. Even though all analysts agree to point out the correlation between this economic prosperity and the increase of the international commodities prices, this situation doesn’t seem to be changing for the moment. However, also according to national and international analysts, there are some threats for this growth path: the likelihood of an energetic crisis and the aggravation of an incipient inflation process. In this paper we focus on the second problem, trying to specify the causes and the mechanisms underlying the prices increases. We start making a brief reference to the present situation, which most remarkable characteristic is the moderate inflation in a high growth context. We synthesize the orthodox criticism and the acknowledgement of the problem by the pro-government sectors. We revise the government measures concerning the inflation problem (price agreements, wages increases restrictions, the agricultural and oil exports withholdings, the transport subventions, the oil prices controls) and the criticized government manoeuvres to disguise the prices index. Then, we make a schematic summary of the inflation theories. Continuously, we briefly recount the history of the Argentine economy inflation, comparing the present inflation with the inflation in different past stages. Finally, based on the previous developments, we establish the main features of the present inflation trying to point out the significant elements underlying the process from those who have only temporary effects or are not relevant in the present situation. -
Boletin Mayo2
THE ARGENTINE EMBASSY IN THE UNITED KINGDOM ECONOMIC & COMMERCIAL SECTION 65 Brook St. London W1K 4AH Tel: 020 7318-1300 Fax: 020 7318-1331 [email protected] www.argentine-embassy-uk.org NEWSLETTER MAY 2004 Content ARGENTINE ECONOMIC OVERVIEW *Extracts from the recent speech delivered by the Argentine Minister of Economy and Production, Roberto Lavagna, at the IMF (24 th April 2004) *Extracts from the latest Inflation Report published by the Argentine Central Bank (BCRA, 22 nd of April) FINANCIAL SECTOR *Improved tax receipts and primary fiscal surplus *Extracts from the presentation and comments made by the Argentine Minister of Economy and Production, Roberto Lavagna, in the Council on Foreign Relations (New York, 21 st of April 2004) ARGENTINE TRADE (provincial exports) TRADE NEWS *MercoLáctea *The London International Wine & Spirits Fair (18-20 May 2004) *Argentine trade stands in Polo events *Co-operation Agreement between EU and INTI (the Argentine Institute for Industrial Technology) ARGENTINE ECONOMIC OVERVIEW Extracts from the recent speech delivered by the Argentine Minister of Economy and Production, Roberto Lavagna, at the IMF (International Monetary and Financial Committee, 24th April 2004): - After a strong real GDP growth rate estimated at 8.7% during 2003, the growth momentum of the Argentine economy continues encompassing practically all areas of economic activity. Sound macroeconomic policies, including the elimination of the quasi-moneys and the appropriate level of the exchange rate, a favourable external environment, and the high degree of popular support for the government, in the context of a smooth political transition, have all contributed to strengthen investors and consumer confidence which is, in fact, the real underpinning of economic activity in Argentina these days. -
The Argentine Elections: Systems and Candidates Carlos M
Volume XV, Issue 5 October 22 , 2007 The Argentine Elections: Systems and Candidates Carlos M. Regúnaga Constitutional and Legal Framework the most votes obtains two senate seats; and the third Argentina will hold presidential and congressional seat is assigned to the party with the second -largest elections on October 28. On the same date, local number of votes. elections will take place in 8 provinces; 16 other local Senators are elected for six years and the composition races were held earlier in the year. Given the of the Senate is renewed by thirds every two years. In uniqueness of Argentina’s electoral system, it is worth orde r to make this provision compatible with the reviewing how the elections are structured as well as electoral system described in the preceding paragraph, examining some of the key individual race s. the 24 districts are divided into three groups of 8 Argentina is a federal state, composed of 23 provinces. districts each. Every second year, 8 districts hold The federal district, the city of Buenos Aires, has the elections for senators. This year, for example, the city status of a province and elects its own executive and of Buenos Aires and the provinces of Chaco, Entre legislature and is represented in the national Congress Ríos, Neuquén, Río Negro, Salta, Santiago del Estero, like all other provinces. For t hat reason, all generic and Tierra del Fuego will elect three senators each. In references to “provinces” or “electoral districts” should the rest of the provinces, citizens will not vote for be understood to include the city of Buenos Aires as senators this year. -
Argentina at the Abyss
ARGENTINA AT THE ABYSS PAUL COONEY1i INDEX I. INTRODUCTION ............................................................................................................................................ 1 II. THE STEPS LEADING UP TO THE CRISIS................................................................................................. 1 III. FOREIGN EXCHANGE CRISIS ................................................................................................................... 2 IV. PRIVATIZATIONS........................................................................................................................................ 2 V. TRADE DEFICIT ........................................................................................................................................... 3 VI. FOREIGN DEBT........................................................................................................................................... 3 1. NEOLIBERAL POLICIES DURING THE DICTATORSHIP OF THE 70S................................................. 3 VII. NEOLIBERAL POLICIES UNDER MENEM AND THE IMPACT OF GLOBALIZATION ............................. 4 VIII. CONVERTIBILITY AND FINANCIAL REFORMS ......................................................................................5 IX. REFORM OF THE STATE AND PRIVATIZATIONS.................................................................................... 5 X. TRADE LIBERALIZATION ........................................................................................................................... -
LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Thursday, May 30, 2019
LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Thursday, May 30, 2019 BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk How Has CFK’s Talks Between Corporate VP, Global Corporate Affairs Cargill Venezuelan Gov’t, Joyce Chang Global Head of Research, Move Altered Opposition End JPMorgan Chase & Co. Face-to-face talks between the Marlene Fernández Venezuelan government and Corporate Vice President for Argentina’s Race? opposition ended in Oslo with no Government Relations, Arcos Dorados agreements other than to continue Peter Hakim talks. President Emeritus, Page 2 Inter-American Dialogue Donna Hrinak President, Boeing Latin America BUSINESS Jon Huenemann Cuba to Legalize Retired VP, U.S. & Int’l Affairs, Philip Morris International Private Wi-Fi James R. Jones Chairman, Networks Monarch Global Strategies The new measures will also allow Craig A. Kelly imports of equipment such as Director, Americas International routers and are to take effect in Gov’t Relations, Exxon Mobil Former Argentine President Cristina Fernández de Kirchner recently announced that she would be running for vice president on a ticket headed by her former cabinet chief, Alberto Fernán- July, the government said. John Maisto Page 3 Director, U.S. Education dez. // File Photo: Facebook site of Cristina Fernández de Kirchner. Finance Group In a surprising turn, former Argentine President Cristina Nicolás Mariscal POLITICAL Chairman, Fernández de Kirchner announced on May 18 that she will be Grupo Marhnos running for vice president in the country’s October election, Colombian High Thomas F. McLarty III Q with her former cabinet chief, Alberto Fernández, as the Chairman, Court Orders McLarty Associates presidential candidate.