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Distributive Effects of Balance-of-Payments Constraints: A Theoretical and Empirical Analysis of Argentina (2004-2022)

Author

Listed:
  • Dvoskin, Ariel

    (Central Bank of Argentina and National Scientific and Technical Research Council, Argentina)

  • Feldman, Germán David

    (Central Bank of Argentina, Buenos Aires, Argentina)

  • Garegnani, María Lorena

    (Central Bank of Argentina and University of La Plata, Argentina)

Abstract

The paper studies the distributive effects of the external constraint in Argentina during the 2004-2022 period. We first develop a model inspired by the classical tradition - exogenous distribution - for a small (price taker) open economy with technical and financial dependencies under foreign exchange controls to examine the negative effects of exchange rate depreciations on real wage. Then, we use a Vector Error Correction Model (VECM): a) to show the long-run negative relationship between the real exchange rate and real wages in Argentina during the period under analysis; b) to identify the autonomous - or weakly exogenous - role played by the nominal exchange rate in the determination of income distribution; and, c) to capture the influence that, in the short-run, the financial exchange rate exerts on the official exchange rate.

Suggested Citation

  • Dvoskin, Ariel & Feldman, Germán David & Garegnani, María Lorena, 2024. "Distributive Effects of Balance-of-Payments Constraints: A Theoretical and Empirical Analysis of Argentina (2004-2022)," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 77(2), pages 233-264.
    • Handle: RePEc:ris:ecoint:0970
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    References listed on IDEAS

    as
    1. Ariel Dvoskin & Germán David Feldman & Guido Ianni, 2020. "On the role of the exchange rate as a tool for industrial competitiveness," Brazilian Journal of Political Economy, Center of Political Economy, vol. 40(2), pages 310-331.
    2. Montes Rojas Gabriel & Dvoskin Ariel & Feldman Germán, 2023. "Exchange-Rate Regime And Sectorial Profitability In A Small Open Economy: A Theoretical And Empirical Analysis Of Argentina (2016-2023)," Asociación Argentina de Economía Política: Working Papers 4673, Asociación Argentina de Economía Política.
    3. Juselius, Katarina, 2006. "The Cointegrated VAR Model: Methodology and Applications," OUP Catalogue, Oxford University Press, number 9780199285679, Decembrie.
    4. Johansen, Soren, 1992. "Cointegration in partial systems and the efficiency of single-equation analysis," Journal of Econometrics, Elsevier, vol. 52(3), pages 389-402, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Argentina; External Constraint; Income Distribution; Small Open Economy; Vector Error Correction Model;
    All these keywords.

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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