Authors: Robert E. Grosse, Clarice Pechman
ISBN-13: 9780275947583, ISBN-10: 0275947580
Format: Hardcover
Publisher: Greenwood Publishing Group, Incorporated
Date Published: November 1994
Edition: (Non-applicable)
ROBERT E. GROSSE is the Director of the Center for International Business of the University of Miami.
Foreign exchange black markets in Argentina, Brazil, Colombia, Jamaica and Peru were studied during the period 1990-93. This group of case studies presents a broad view of the phenomenon in Latin America at the beginning of the 1990s. This is not a traditional economic analysis of foreign exchange markets, for many reasons. Most importantly, since black markets are illegal by definition, they are not recorded in offical statistics and the participants are not easily identified. Nevertheless, these markets are often widely used and well known to people living in the Latin American countries, so it is possible to paint a reasonably accurate picture of them.
The work is based largely on interviews with black market participants in each country. This primary means of collecting information was desirable because of the general lack of published sources of data or other records; though published information was also used when available. The book discusses foreign exchange black markets from a variety of perspectives, looking at who participates in them, how they function, and what impacts they have on local economies.
Preface | ||
1 | Introduction | 1 |
Definition of Foreign Exchange Black Markets | 1 | |
Reasons for Their Existence | 3 | |
Institutional Characteristics of Forex Black Markets | 4 | |
Retail vs. Wholesale | 5 | |
Types of Users | 6 | |
Links to the Underground Economy | 7 | |
Classification of Countries | 8 | |
Main Questions to be Addressed in the Book | 8 | |
2 | Historical and Cultural/Institutional Context of Foreign Exchange Black Markets in Latin America | 17 |
The Government as Impediment to International Business | 18 | |
The Underground Economy in Latin America | 19 | |
Foreign Exchange Black Markets from World War II to 1971 | 20 | |
Foreign Exchange Black Markets During the 1970s and 1980s | 22 | |
The Cultural Imperative of Black Markets | 23 | |
3 | The Economics of Foreign Exchange Black Markets | 31 |
Macroeconomic Implications | 32 | |
Market Characteristics | 37 | |
Exchange Market Equilibrium and Efficiency | 43 | |
Determination of the Black Market Exchange Rate | 43 | |
Overall Welfare Implications | 47 | |
4 | Argentina | 51 |
History | 52 | |
Institutional Description of the Black Market (1987-1990) | 57 | |
Costs and Risks in the Black Market | 64 | |
Determinants of the Parallel Market Exchange Rate | 65 | |
Economic Implications of the Black Market for Argentina | 69 | |
5 | Brazil | 73 |
Historical Aspects and Profitability | 75 | |
Foreign Exchange Policy: From 1973 to 1992 | 81 | |
The Brazilian Foreign Exchange System and the Behavior of the Dollar in the Black Market | 97 | |
Sources of Dollars for the Black Market | 101 | |
The Model of the Black Market for Dollars | 105 | |
Seasonal Factors | 110 | |
Empirical Results of the Model | 111 | |
6 | Colombia | 123 |
The Colombian Case | 123 | |
Structure and Functioning of the Black Market | 125 | |
Determination of the Black Market Exchange Rate | 132 | |
Implications of the Black Market for Colombia | 136 | |
7 | Jamaica | 143 |
Broad Characteristics of the Market | 144 | |
Distinguishing Features of Jamaica's Black Market | 145 | |
History of Foreign Exchange Markets | 146 | |
Institutional Description of the Black Market, 1987-1991 | 147 | |
Costs and Risks in the Black Market | 160 | |
Determination of the Exchange Rate | 161 | |
8 | Peru | 169 |
Recent History of Peru's Foreign Exchange Markets | 170 | |
Structure and Functioning of the Black Market in the late 1980s | 173 | |
Determination of the Black Market Exchange Rate | 179 | |
The Model | 180 | |
Implications of the Black Market for Peru | 183 | |
9 | Conclusions | 189 |
Country Notes | 190 | |
Welfare Effects | 192 | |
Black Markets in the 1990s | 194 | |
Appendix | 195 | |
Bibliography | 219 | |
Index | 223 |