Publications of Della Paolera, G.

Della Paolera G, Grandes M. The true measures of country risk : a primer on the interrelations between solvency and the policy of emerging markets : Argentina 1886-1892. In: Edwards S, Esquivel G, Márquez G, editors. The decline of Latin American economies : growth, institutions, and crises. Chicago: The University of Chicago Press; 2007. p. 195-211. (A National Bureau of Economic Research conference report).
Grandes M, Della Paolera G. Foreword. In: Yusuf S, Nabeshima K, editors. How universities promote economic growth : directions in development. Washington, DC: World Bank Publications; 2006. xiii.
Della Paolera G, Taylor AM. Sovereign Debt in Latin America : History. Washington, D.C.: Research Department : Inter-American Development Bank; 2006.

A new economic history of Argentina

Ten papers, presented at a conference at the Hotel Llao Llao in Bariloche in November 2000, provide access to the current state of research on the economic development of Argentina in the nineteenth and twentieth centuries. Papers discuss the early Argentine economy from 1810 to 1870; monetary and fiscal policies; economic cycles; the labor market; capital accumulation; international trade and commercial policy; agriculture; industry; banking and finance, 1900-1935; and business, government, and law. Della Paolera is at the American University of Paris. Taylor is at the University of California, Davis. Index.

Della Paolera G. Globalization in Interdisciplinary Perspective : A Panel. In: Bordo MD, Taylor AM, editors. Globalization in historical perspective. Chicago: University of Chicago Press; 2003. p. 549-70. (A National Bureau of Economic Research conference report).
Della Paolera G, Gallo E. Epilogue : The Argentine Puzzle. In: Della Paolera G, Taylor AM, editors. A new economic history of Argentina. Cambridge: Cambridge University Press; 2003. p. 369-75.
Della Paolera G, Taylor AM. Introduction. In: A new economic history of Argentina. Cambridge: Cambridge University Press; 2003. p. 1-18.
Della Paolera G, Taylor AM, Bozzoli CG. Historical Statistics. In: Della Paolera G, Taylor AM, editors. A new economic history of Argentina. Cambridge: Cambridge University Press; 2003. p. 376-85.
Della Paolera G, Taylor AM, Pería MS, Cárdenas E. Gaucho Banking Redux [with Comments]. Economía : Journal of the Latin American and Caribbean Economic Association. 2003;3(2):1-42.

Gaucho Banking Redux

Argentina's economic crisis has strong similarities with previous crises stretching back to the nineteenth century. A common thread runs through all these crises: the interaction of a weak, undisciplined, or corruptible banking sector, and some other group of conspirators from the public or private sector that hasten its collapse. This pampean propensity for crony finance was dubbed gaucho banking' more than one hundred years ago. What happens when such a rotten structure interacts with a convertibility plan? We compare the 1929 and 2001 crises the two instances where rigid convertibility plans failed and reach two main conclusions. First, a seemingly robust currency-board can be devastated by an ill-conceived approach to the problems of internal and external convertibility (or, to rephrase Gresham, bad inside money drives out good outside money'). Second, when modern economic orthodoxy collides with caudillo-style institutional backwardness, a desperate regime with its hands tied in both monetary and fiscal domains will be sorely tempted by a capital levy' on the financial sector (for, as Willie Sutton said when asked why he robbed banks, because that's where the money is).

Gaucho banking redux

Argentina's economic crisis has strong similarities with previous crises stretching back to the nineteenth century. A common thread runs through all these crises: the interaction of a weak, undisciplined, or corruptible banking sector, and some other group of conspirators from the public or private sector that hasten its collapse. This pampean propensity for crony finance was dubbed "gaucho banking" more than one hundred years ago. What happens when such a rotten structure interacts with a convertibility plan? We compare the 1929 and 2001 crises-the two instances where rigid convertibility plans failed-and reach two main conclusions. First, a seemingly robust currency-board can be devastated by an ill-conceived approach to the problems of internal and external convertibility (or, to rephrase Gresham, "bad inside money drives out good outside money"). Second, when modern economic orthodoxy collides with caudillo-style institutional backwardness, a desperate regime with its hands tied in both monetary and fiscal domains will be sorely tempted by a "capital levy" on the financial sector (for, as Willie Sutton said when asked why he robbed banks, "because that's where the money is").

Internal versus external convertibility and emerging-market crises: lessons from Argentine history

Argentina's money and banking system was hit hard by the Great Depression. Banks were awash with bad assets when gold convertibility was suspended in December 1929. We argue for an explanation of the crisis that focuses on the inside-outside money relationship in a system of fractional-reserve banking and gold-standard rules with a tension between internal and external convertibility. After financial fragility appeared in the 1914-1927 suspension, resumption in 1928 was probably unsustainable due to the problems of the financial system and a dynamic model illustrates the point well. When the state bank became insolvent, the currency board started bailing out the system using high-powered money. Thus, came about the demise of the currency board and the creation of a central bank in 1935. As one of its first substantive actions, the central bank engineered a bailout of the banking system at a massive social cost. The parallels with recent developing-country crises are remarkable and the implications for the institutional design of monetary and banking systems are considered. (C) 2002 Elsevier Science (USA). All rights reserved.

NBER Series on Long-term Factors in Economic Growth

Explores the macroeconomic history of Argentina from 1800 to 1935, which saw the rise and fall of the country's first great convertability experiment. Discusses the general contours of Argentine monetary and credit policies in the 1880s and the drift toward crisis. Examines the Baring Crisis of 1890-91. Considers the macroeconomic policy choices open to Argentina in the years before, during, and after the Baring Crisis. Describes adjustments in the financial and real sectors and a pronounced deflation in the years 1891-99, which put Argentina back in a position to restore external convertibility. Examines Argentina's experience under convertibility from 1899 until the international gold standard was suspended by war in 1914. Discusses financial fragility in the interwar period and, by focusing on the distinction between external and internal convertibility, identifies a critical juncture at which the collapse of the Argentine financial system seemed perilously close. Investigates macroeconomic stability and policy in Argentina during the Great Depression. Della Paolera is Rector and Professor of Economics at the Universidad Torcuato Di Tella. Taylor is Associate Professor of Economics at the University of California, Davis. Name and subject indexes.

Globalization in interdisciplinary perspective : A panel

Conference proceedings."The papers were presented at a preconference at the NBER in Cambridge, Massachusetts, on 16 November 2000, and at a final conference held at the Four Seasons Biltmore Hotel, Santa Barbara, California, on 3-6 May 2001"

Della Paolera G. La Argentina bajo patrón de cambio oro (1899-1914). In: Nueva historia de la nación Argentina. Vol vol. 5. Buenos Aires: Editorial Planeta; 2000.

Economic Recovery from the Argentine Great Depression: Institutions, Expectations, and the Change of Macroeconomic Regime

This work explores how Argentina overcame the Great Depression and asks whether active macroeconomic interventions made any contribution to the recovery. In particular, we study Argentine macroeconomic policy as it deviated from gold-standard orthodoxy after the final suspension of convertibility in 1929. As elsewhere, fiscal policy in Argentina was conservative, and had little power to smooth output. Monetary policy became heterodox after 1929. The first and most important stage of institutional change took place with the switch from a metallic monetary regime to a fiduciary regime in 1931; the Caja de Conversion (Conversion Office, a currency board) began rediscounting as a means to sterilize gold outflows and avoid deflationary pressures, thus breaking from orthodox game. and were not enough to fully offset the incipient monetary contractions: the recovery derived from changes in beliefs and expectations surrounding the shift in the monetary and exchange-rate regime, and the delinking of gold flows and the money base. Agents perceived a new regime, as shown by the path of consumption, investment, and estimated ex ante real interest rates: the predated a later, and supposedly more significant, stage of institutional reform, namely the creation of the central bank in 1935. Still, the extent of intervention was weak, and insufficient to fully offset external shocks to prices and money. Argentine macropolicy was heterodox in terms of the change of regime, but still conservative in terms of the tentative scope of the measures taken.

Economic Recovery from the Argentine Great Depression : Institutions, Expectations, and the Change of Macroeconomic Regime

Did macroeconomic interventions make any contribution to Argentina's recovery from the Great Depression? Macroeconomic policy deviated from gold-standard orthodoxy after the final suspension of convertibility in 1929. Fiscal policy was conservative. Monetary policy became unorthodox after 1931, when the Caja de Conversión began rediscounting to sterilize gold outflows and avoid deflation. This change predated the creation of the central bank in 1935. A wider literature links the interwar depression in the core to flaws in the gold standard, and active monetary policy to escape from deflation and slump; our work extends this idea to the periphery.

Internal Versus External Convertibility and Developing-Country FinancialCrises : Lessons from the Argentine Bank Bailout of the 1930's

Argentina's money and banking system was hit hard by the Great Depression. The banking sector was awash with bad assets that built up in the 1920's. Gold convertibility was suspended in December 1929, even before the crisis seriously damaged the core economies. Commonly, these events are seen as being driven by external real shocks associated with the World Depression, despite the puzzle of the timing. We argue for an alternative, or complementary, explanation of the crisis that focuses on the inside-outside money relationship in a system of fractional-reserve banking and gold-standard rules. This internal explanation for the crisis involves no timing puzzle. The tension between internal and external convertibility can be felt when banks fall into bad times, and an internal drain can feed an external drain. Such was the case after financial fragility appeared in the 1914-27 suspension. Resumption in 1928 was probably unsustainable due to the problems of the financial system, and a dynamic model illustrates the point well. The resolution of the crisis required lender-of-last-resort actions by the state, discharged at first by the state bank issuing rediscounts to private banks. When the state bank became insolvent, the currency board started bailing out the system using high-powered money. Thus came about the demise of the currency board and the creation of a central bank in 1935, an institution that had no pretense of a nominal-anchor commitment device and no ceiling on lender-of-last-resort actions-innovations with painful long-run consequences for inflation performance and financial-sector health. As one of its first substantive actions, the central bank engineered a bailout of the banking system at a massive social cost. The parallels with recent developing-country crises are remarkable, and the implications for the institutional design of monetary and banking systems are considered.

Della Paolera G, Taylor AM. Finance and Development in an Emerging Market : Argentina in the Interwar Period. In: Coatsworth JM, Taylor AM, editors. Latin America and the world economy since 1800. Cambridge: Harvard University Press; 1998. p. 139-69. (David Rockefeller Center Series on Latin American Studies).
Della Paolera G. Central Bank independence and foreign exchange policies in Latin America. In: Aguirre E, R J, Miller G, editors. La Banca Central en América Latina : aspectos económicos y jurídicos. Bogotá: Banco de la República; 1997. p. 323-32.

Finance and Development in an Emerging Market : Argentina and the Interwar Period

The long-run economic performance of Argentina since World War One has been relatively disappointing until recently. Yet, in the interwar period, signs of future retardation and" recurring crises were not so obvious. It is often claimed that an unmitigated success was the" remarkably rapid growth of domestic financial markets. In conventional models deepening industrializing economy such as" Argentina's. Yet the promise of this trend was unfulfilled: first the outbreak of World War One" and then the Great Depression proved a setback for the fledgling financial system deterioration set in after 1940. In this paper we trace the course of financial development using" historical and international comparisons and we analyze both macro- and microeconomic aspects" of financial intermediation.

How the Argentine economy performed during the international gold standard a reexamination

Presented at Rutgers University, Delaware University,Second Cliometric World Congress, Santander, Spain, University of Chicago.