Exchange Controls and Macroeconomic Instability: Lessons from Argentina

Exchange Controls and Macroeconomic Instability: Lessons from Argentina | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Exchange Controls and Macroeconomic Instability: Lessons from Argentina Hugo Holmgren, Victor Espinosa This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-9077322/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This paper examines the macroeconomic effects of exchange controls in Argentina between 2003 and 2023, combining a historical-institutional perspective with a structural vector autoregression (SVAR) identified through sign restrictions. The analysis integrates the monetary trilemma, Austrian business cycle theory, and institutional economics to explain how persistent exchange restrictions exacerbated macroeconomic distortions, reduced investment, and undermined credibility. Empirical results indicate that controls provide short-term stabilization at the expense of long-term instability, thereby fueling inflationary pressures, currency misalignments, and recurring balance-of-payments crises. By reconstructing three distinct exchange-control regimes, the study underscores the institutional fragility that hinders sustainable monetary governance. The findings contribute to the comparative literature on financial repression, offering lessons for emerging economies facing similar constraints. Unlike previous studies, this paper combines a structural VAR approach with an institutional narrative, offering a novel lens on the persistence of exchange controls. Exchange controls Inflation Argentina Financial repression Institutional fragility SVAR Austrian Economics Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-9077322","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":604629404,"identity":"3f6e3f80-e362-4354-9c88-7c56c6a3e0c0","order_by":0,"name":"Hugo Holmgren","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAABD0lEQVRIiWNgGAWjYBACAyBmZmCwgAvw8IPIhAKCWiTgAjKSDSAtBiRosTE4ABPHAcwl0i8+LqiQiJaPPnzscWVbHY/x+dWJHx4YMMjzix3AqsVyRk6x8YwzErkbz6WlG55tY+Mxu/F2swTQYYYzZydgd9iNnDRp3jaglh4eM8nGNh6glrMbQFoSDG4T1ML/DahFgsd4xtnNP/BrST8G1jKfh4cNqMWAx4C/dxt+W868YTbmAfplAw+bmWTDuQQeiRu82ywSDCRw++V4+sPHPBU2ufN7mJ9JNpTV2fP3n91880eFjTy/NHYtwOiGRAEkOkBAAqxSAqtiCGB/AKbkG2AC/AewKRsFo2AUjIIRDABFyFsw68mqBgAAAABJRU5ErkJggg==","orcid":"","institution":"","correspondingAuthor":true,"prefix":"","firstName":"Hugo","middleName":"","lastName":"Holmgren","suffix":""},{"id":604629405,"identity":"48a547af-1788-48a9-aaf0-a7ccfbb84575","order_by":1,"name":"Victor Espinosa","email":"","orcid":"","institution":"Universidad del Desarrollo","correspondingAuthor":false,"prefix":"","firstName":"Victor","middleName":"","lastName":"Espinosa","suffix":""}],"badges":[],"createdAt":"2026-03-09 23:23:17","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-9077322/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-9077322/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":104808848,"identity":"2ad31386-aaf2-4194-8036-c3c315a97ea7","added_by":"auto","created_at":"2026-03-17 12:40:12","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":1279762,"visible":true,"origin":"","legend":"","description":"","filename":"ExchangeControlsandMacroeconomicInstabilityfinalformat.pdf","url":"https://assets-eu.researchsquare.com/files/rs-9077322/v1_covered_28d962eb-8ad3-4d4b-ab05-91b4266a695b.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"Exchange Controls and Macroeconomic Instability: Lessons from Argentina","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Exchange controls, Inflation, Argentina, Financial repression, Institutional fragility, SVAR, Austrian Economics ","lastPublishedDoi":"10.21203/rs.3.rs-9077322/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-9077322/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"This paper examines the macroeconomic effects of exchange controls in Argentina between 2003 and 2023, combining a historical-institutional perspective with a structural vector autoregression (SVAR) identified through sign restrictions. The analysis integrates the monetary trilemma, Austrian business cycle theory, and institutional economics to explain how persistent exchange restrictions exacerbated macroeconomic distortions, reduced investment, and undermined credibility. Empirical results indicate that controls provide short-term stabilization at the expense of long-term instability, thereby fueling inflationary pressures, currency misalignments, and recurring balance-of-payments crises. By reconstructing three distinct exchange-control regimes, the study underscores the institutional fragility that hinders sustainable monetary governance. The findings contribute to the comparative literature on financial repression, offering lessons for emerging economies facing similar constraints. Unlike previous studies, this paper combines a structural VAR approach with an institutional narrative, offering a novel lens on the persistence of exchange controls.","manuscriptTitle":"Exchange Controls and Macroeconomic Instability: Lessons from Argentina","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2026-03-17 09:04:23","doi":"10.21203/rs.3.rs-9077322/v1","editorialEvents":[{"type":"communityComments","content":0}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"f08e4415-4109-45c4-b939-eab16f713b7e","owner":[],"postedDate":"March 17th, 2026","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"posted","subjectAreas":[],"tags":[],"updatedAt":"2026-03-17T09:04:23+00:00","versionOfRecord":[],"versionCreatedAt":"2026-03-17 09:04:23","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-9077322","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-9077322","identity":"rs-9077322","version":["v1"]},"buildId":"XKTyCvWXoU3ODBz1xrDgd","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}