Monetary Policy in Argentina: Seignorage and Bailey's Curve 2001-2014

Frankfurt

Congreso; Arnoldshain Seminar XIII; 2015

Universidad de Fankfurt.

Our main hypothesis in this paper is that in countries as Argentina, with an inflationary long story, the rate of inflation needed to sustain a given long run fiscal deficit is higher than in other emerging economies. In these economies, the money issuing have been constrained by monetary rules. For example, in Greece, it is absolutely banned the issue of money because the country is part of the European Union. Taking into account all the above, the aim of the paper is to analyze the behavior of monetary policy in Argentina and, as a second step, to stress possible differences with the policy applied in other emerging economies of the European Union. In doing this, some additional research questions emerge: What effects could provoke seignorage on exchange rate? Is the level of inflation rate in the possible maximum to maximize the seignorage? Is a good policy measure to use this kind of monetary policy to get a greater growth rate?