The Monetary and Fiscal History of Uruguay: 1960-2017

35 Pages Posted: 24 Aug 2018 Last revised: 2 Mar 2019

See all articles by Joaquin Marandino

Joaquin Marandino

Universidad Torcuato Di Tella

Gabriel Oddone

Universidad de la Republica

Date Written: August 24, 2018

Abstract

This paper analyzes the monetary and fiscal history of Uruguay between 1960 and 2017. The aim is to explore the links between unfavorable fiscal and monetary policies, nominal instability and macroeconomic performance. The 1960s is characterized by high inflation and sustained large deficits, and a large banking crisis in 1965. Since the mid-1970s, the government liberalized the economy and attempted to stop the money financing of deficits that prevailed in the previous decade. During the transition to a more open economy, Uruguay encountered two major crises in 1982 and 2002: the former was very costly in fiscal terms and brought back the monetization of deficits, while the latter had significantly lower effects on deficit and inflation. The evidence collected suggests governments have slowly understood the importance of fiscal constraints to guarantee nominal stability.

Suggested Citation

Marandino, Joaquin and Oddone, Gabriel, The Monetary and Fiscal History of Uruguay: 1960-2017 (August 24, 2018). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2018-60, Available at SSRN: https://ssrn.com/abstract=3238177 or http://dx.doi.org/10.2139/ssrn.3238177

Joaquin Marandino (Contact Author)

Universidad Torcuato Di Tella ( email )

Minones 2159
C1428ATG Buenos Aires, 1428
Argentina

Gabriel Oddone

Universidad de la Republica

Gonzalo Ramirez 1926
Montevideo, 11200
Uruguay

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