Abstract

This paper traces the macroeconomic roots of the current agricultural crisis. It
shows that the increase in inflationary instability after 1986, and the policies adopted by the
Government, since then, to fight hyperinflation, caused the terms of trade of agriculture to
be- come much more unstable, at the same time that the Government pulled back the support
they had been providing to agriculture; these adverse conditions ultimately caused the
reduction of activity levels in agriculture in 1989 and 1990. The paper concludes by pointing
out the implications for the current stabilization strategy.

JEL Classification: Q18; Q11.