ABSTRACT
Introduction Argentina is a case of a failed fiscal policy that culminated in 2001 in a financial default. After a fiscal responsibility law in 2004 and a more favorable economic situation, Argentina was moving in a good direction. This, however, changed again when economic conditions deteriorated in 2009. Argentina’s “coordination regime” is characterized by balanced safeguards and a tightly coupled fiscal regime. The FG and the SNG engage in opportunistic behavior to influence parliamentarians through pork-barreling and side payments. The SNG are dependent on FG transfers, which are guaranteed by and fixed in the constitution. This creates a voluntary vertical fiscal imbalance (VFI), which is in the interest of the SNG, as they can blame the FG while getting the spoils for its spending policies. Statistical and financial data for Argentina were treated in this chapter with utmost care, as the International Monetary Fund (IMF ) clearly stated repeatedly that Argentina did not report its inflation and GDP statistics correctly.1
