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Argentina's lost decade and subsequent recovery: hits and misses of the neoclassical growth model

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  • Finn E. Kydland
  • Carlos E.J.M. Zarazaga

Abstract

We examine the economic depression that Argentina suffered in the 1980s, as well as the subsequent recovery, from the perspective of growth theory, taking total factor productivity as exogenous. The predictions of the neoclassical growth model conform rather well with the evidence for the "lost decade" depression and at the same time point to a puzzle: Investment did not recover in the subsequent decade of the 1990s nearly as fast as it should have according to that same model.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Dallas in its series Center for Latin America Working Papers with number 0403.

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Date of creation: 2003
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Handle: RePEc:fip:feddcl:0403

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Keywords: Depressions;

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  1. Gary D. Hansen & Edward C. Prescott, 1992. "Recursive methods for computing equilibria of business cycle models," Discussion Paper / Institute for Empirical Macroeconomics 36, Federal Reserve Bank of Minneapolis.
  2. Osvaldo Meloni, 2005. "Crecimiento potencial y productividad en la Argentina: 1980-1997," Development and Comp Systems 0503001, EconWPA.
  3. Patrick J. Kehoe & Fabrizio Perri, 2000. "International Business Cycles with Endogenous Incomplete Markets," NBER Working Papers 7870, National Bureau of Economic Research, Inc.
  4. Finn E. Kydland & Carlos E. J. M. Zarazaga, 2002. "Argentina's Lost Decade," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(1), pages 152-165, January.
  5. Michael Sarel, 1997. "Growth and Productivity in ASEAN Countries," IMF Working Papers 97/97, International Monetary Fund.
  6. Timothy Kehoe & Edward Prescott, 2002. "Data Appendix to Great Depressions of the Twentieth Century," Technical Appendices kehoe02, Review of Economic Dynamics.
  7. Hansen, Gary D., 1997. "Technical progress and aggregate fluctuations," Journal of Economic Dynamics and Control, Elsevier, vol. 21(6), pages 1005-1023, June.
  8. Brock, William A. & Mirman, Leonard J., 1972. "Optimal economic growth and uncertainty: The discounted case," Journal of Economic Theory, Elsevier, vol. 4(3), pages 479-513, June.
  9. Harold L. Cole & Lee E. Ohanian, 1999. "The Great Depression in the United States from a neoclassical perspective," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 2-24.
  10. Fernando Alvarez & Urban J. Jermann, 2000. "Efficiency, Equilibrium, and Asset Pricing with Risk of Default," Econometrica, Econometric Society, vol. 68(4), pages 775-798, July.
  11. Timothy J. Kehoe & Edward C. Prescott (), 2007. "Great depressions of the twentieth century," Monograph, Federal Reserve Bank of Minneapolis, number 2007gdott.
  12. Kehoe, Timothy J & Levine, David K, 2001. "Liquidity Constrained Markets versus Debt Constrained Markets," Econometrica, Econometric Society, vol. 69(3), pages 575-98, May.
  13. José De Gregorio & Jong-Wha Lee, 1999. "Economic Growth in Latin America: Sources and Prospects," Documentos de Trabajo 66, Centro de Economía Aplicada, Universidad de Chile.
  14. Edward C. Prescott & Stephen L. Parente, 1999. "Monopoly Rights: A Barrier to Riches," American Economic Review, American Economic Association, vol. 89(5), pages 1216-1233, December.
  15. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-70, November.
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Cited by:
  1. Nan Li & Ceyhun Bora Durdu & Emine Boz, 2010. "Labor Market Search in Emerging Economies," 2010 Meeting Papers 255, Society for Economic Dynamics.
  2. Diego N. Moccero, 2006. "The Intertemporal Approach to the Current Account: Evidence from Argentina," Department of Economics, Working Papers 066, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.

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