Volatile Macroeconomic Environment Research Articles

How Do Canadian Budget Forecasts Compare With Those of Other Industrial Countries?

This paper compares Canadian central government budget forecasting with forecasting by other industrial countries. While fiscal forecasting in Canada is governed by one of the strongest institutional frameworks, quantitative analysis suggests that budget projections of macroeconomic and fiscal aggregates have been more cautious than in other countries since the mid-1990s. The relatively volatile macroeconomic environment as well as institutional factors, such as Canada&apos's asymmetric deficit target, have likely contributed to this outcome.

Argentina’s Banking Sector in the Nineties: From Financial Deepening to Systemic Crisis

The first important attempt to liberalize financial marketsin Argentina took place between 1977 and 1981 and was acomplete failure. Throughout the eighties the degree of"financial repression" oscillated but interest rates werebasically market-determined. However, the financial systemoperated under important distortions related to the volatilemacroeconomic environment. The implementation of theConvertibility Plan in March/April 1991 and the drop ininternational interest rates gave a decisive thrust to theliberalization policy undertaken in mid-1989, whose aim wasto restructure the economy along "market-friendly" lines.Considering this background, the paper tries to accomplishtwo goals. One is to analyze the most importantrepercussions of the reform process on the structural andinstitutional features of the Argentine banking system.Based on this analysis, the second goal is to understand whythe Tequila effect prompted such a deep financial crisis inArgentina, unless the less traumatic effects induced in allother major Latin American economies, and to assess the mainrepercussions of this crisis. In order to do so, the paperis organized into four sections. The first section brieflyanalyzes Argentina's main macroeconomic and financialchanges in the early nineties; the second one deals with therecent evolution of its banking system; the third sectiondiscusses the Tequila effect; finally, the last sectionreviews the main conclusions and suggests some policyimplications.