According to economist Gerald Epstein, co-director of the Alternatives to Inflation Targeting Project at the Political Economy Research Institute of the University of Massachusetts Amherst, the Argentine reforms are in line with the historical practices of many central banks. In both industrialized and developing countries, central banks were historically more integrated with governments on macroeconomic policymaking, even coordinating credit allocation policies with them. Epstein cites several successful economic recoveries after the Second World War that were based on such collaboration, including examples from South Korea, Taiwan, China, and India.
It will be interesting to see whether Argentina's reforms inspire other countries to adopt similar changes, thus bringing about a sea change in monetary policy around the world. International enthusiasm for Argentina's reforms is building: economists in the UK, the U.S., Turkey, and elsewhere have been sending letters of support. Epstein, a signatory to the U.S. letter, says: "I hope other countries will look closely at the Argentine experience and be inspired to go down a similar path: To transform their central banks to act less as agents of finance and instability and more as agents of equity promoting economic development."
Less enthusiastic about such prospects are champions of financial liberalization, such as those at The Economist and The Wall Street Journal, and at least two generations of economists who've built their careers on the efficacy of central bank independence. In queries for this report, the IMF press office would only say, "No comment."
SUBJECTS:
