The Causes and Consequences of IMF interventions in the Southern Cone
Abstract
The decade that followed the Mexican crisis of 1995 was punctuated by various episodes of intense financial instability in Latin America. As a result, the IMF was almost continuously involved in many of these countries and, most notably, in the Southern Cone. Although the Fund has often been accused for its 'one size fits all' approach, the reality is that its interventions in Argentina and Uruguay exhibit a great deal of variation. Indeed, the suspension of the Argentine program in December 2001 stands in stark contrast with the Uruguayan rescue of August 2002. This outcome is particularly puzzling given that whereas Argentina was at that time an important emerging market having attracted large volumes of capital inflows during the 1990s Uruguay was practically irrelevant on a global scale. Why was the multilateral response to the two crises so different? What are the determinants of IMF interventions in emerging markets that these case studies help unveil? How did these contrasting multilateral interventions impact on the medium term trajectories of Argentina and Uruguay?
In order to shed some light on the causes of the IMF's interventions, this dissertation adopts a two-level framework to analyse the negotiations between the Argentine and Uruguayan governments and the IMF from 1995 and 2005. This approach integrates the domestic and the international levels of analysis, establishing a causal link between ratification processes at the country level and at the level of the Fund's executive board and the final outcome of these negotiations. In order to analyse the consequences of IMF interventions, this project argues that the Argentine and the Uruguayan cases constitutes valid counterfactuals of each other. Indeed, given that both countries share many characteristics and departed from comparable circumstances, the economic, political and institutional divergences that followed the 2001/02 crisis can be partly attributed to the contrasting IMF response to these two crises.
Supervisors
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Dr Kenneth Shadlen and Dr Lauren M Phillips
Research areas
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International Political Economy
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Latin America
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Macroeconomics
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Reform of the international financial archtecture
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Sovereign debt crises
CV/Resume
Publications
Carmen Broto, Javier Díaz-Cassou & Aitor Erce. 2011. Measuring and Explaining the Volatility of Capital Flows Towards Emerging Economies in Journal of Banking and Finance
Javier Díaz-Cassou and Aitor Erce-Domínguez. 2011. IMF Interventions in Sovereign Debt Restructurings. In Sovereign Debt, from Safety to Default, Robert Kolb Ed., Hoboken: Wiley and sons, 2011
Javier Díaz-Cassou and Aitor Erce-Domínguez. 2010. Creditor Discrimination During Sovereign Debt Restructurings. Bank of Spain Working Paper No. 0617 1027.
Javier Díaz-Cassou, Aitor Erce-Domínguez & Juan Vázquez. 2008. Recent Episodes of Sovereign Debt Restructuring: a Case Study Approach. Bank of Spain Occasional azPaper No. 0804
Javier Díaz-Cassou, Aitor Erce-Domínguez & Juan Vázquez. 2008. The Role of the IMF in Sovereign Debt Restructurings: Implications for the Policy of Lending Into Arrears. Bank of Spain Occasional Paper No. 0805
Javier Díaz-Cassou, Alicia García-Herrero & Luis Molina. 2006. What Kind of Capital Flows Does the IMF Catalyze and When. Bank of Spain Working Paper No. 0617
Javier Díaz-Cassou, María-Jesús Fernández & Santiago Fernández de Lis. 2006. IMF Financial Facilities : Signalling vs. Insurance. Bank of Spain Economic Bulletin January
Javier Díaz-Cassou & Stefano Pettinato. A Needs Assessment of Pension Systems in the English Speaking Caribbean. In A Quarter Century of Pension Reform in Latin America and the Caribbean: Lessons Learned and Next Steps, Carolin Crabbe Ed., Inter-American Development Bank, 2005
Languages
1 = basic; 2 = intermediate; 3 = fluent
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English (3S, 3W)
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Spanish (native)
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French (native)
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Italian (3S, 3W)
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Portuguese (2S, 1W)
Contact information
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ID, London School of Economics, Houghton Street, London, WC 2A 2AE, United Kingdom
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Email:j.diaz-cassou@lse.ac.uk