The current unsustainable boom in the Argentine economy

Abstract

Since 2010, Paul Krugman has been suggesting that Greece, Spain, Ireland and other European countries should consider abando-ning the euro and devalue their currencies in order to solve their fiscal difficulties. In January of 2011 Krugman repeated the same prescription, but added that the Argentine default and devalua - tion of 2001-2002 should be taken as an example of what Greece and other European countries in trouble should do to escape the crisis in which they are immersed.
 In Krugman’s own words:
 Some economists, myself included, look at Europe’s woes and have the feeling that we’ve seen this movie before, a decade ago on another continent - specifically, in Argentina. […] Argentina didn’t simply default on its foreign debt; it also abandoned its link to the dollar, allowing the peso’s value to fall by more than two-thirds. And this devaluation worked: from 2003 onward, Ar-gentina experienced a rapid export-led economic rebound. (Krug-man, 2011a).1
 The Argentinian government could not resist the temptation to use the unfortunate words of this Nobel Prize winner to con-gratulate themselves on the success of policies implemented over the last decade.
 My objective is to try to clarify what happened in Argentina’s recent economic history, in order to shed light on a current and controversial topic in the field of economic policy.