Growth in real GDP per capita of 4.0% in 1993, 4.5% in 1994, -4.2% in 1995, 4.2% in 1996, 6.8% in 1997, 2.6% in 1998. These left Argentina in 1998 with real GDP per capita levels 18% above what they had been six years earlier--a pace of growth that, if it could have been sustained, would double Argentinian material standards of living in 24 years.
Then the appreciation of the dollar coupled with the Currency Board that ties the peso to the dollar made Argentinian exports uncompetitive, and created expectations of a devaluation; the runup of government debt created further expectations of a devaluation; the failure of a devaluation to take place caused large increases in peso interest rates as financiers anticipated that devaluation would come soon, and these increases in interest rates discouraged investment. The fall in investment and in exports created a recession...
As Barry Eichengreen pointed out to me last spring, the parallels between the situation of Argentina in 2001 under its Currency Board and Britain in 1928 after its return to the Gold Standard were remarkably close...
Brad DeLong