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Explaining the Argentine growth paradox: new evidence applying cointegration techniques

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  • Foders, Federico
  • Glismann, Hans H.
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    Abstract

    In this paper we revisit three hypotheses, which we had proposed before, in an attempt to explain the long-run pattern of Argentine real GDP growth: (i) distributional conflicts (between the government and the private sector, and between entrepreneurs and trade unions), (ii) a permissive monetary policy, and (iii) the delinking of the Argentine economy from the world markets. Applying unit root econometrics we determine that the model is not cointegrated and that it should be estimated with conventional methods in difference form. Alternative estimates . indicate that the best fit is achieved by a model representing hypotheses (i) and (ii) but not (iii). Thus, foreign trade seems not to have had any impact on Argentine GDP during the period studied. Also, the conflict between entrepreneurs and trade unions does not seem to have had an important influence on Argentine growth, at least in the period 1915 - 1978. However, the results for the extended period 1915 - 1988 indicate that our model representing hypotheses (i) and (ii) does not perform well in explaining the 1980s, when substantial changes in economic policy took place in Argentina.

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    Bibliographic Info

    Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 506.

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    Date of creation: 1992
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    Handle: RePEc:kie:kieliw:506

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    1. Blejer, Mario I. & Cheasty, Adrienne, 1988. "High inflation, heterodox stabilization, and fiscal policy," World Development, Elsevier, Elsevier, vol. 16(8), pages 867-881, August.
    2. Foders, Federico & Glismann, Hans H., 1985. "Wirtschaftskrise in Argentinien : eine Analyse der langfristigen Ursachen," Open Access Publications from Kiel Institute for the World Economy, Kiel Institute for the World Economy (IfW) 1303, Kiel Institute for the World Economy (IfW).
    3. Cochrane, John H., 1991. "A critique of the application of unit root tests," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 15(2), pages 275-284, April.
    4. Stock, James H & Watson, Mark W, 1988. "Variable Trends in Economic Time Series," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 2(3), pages 147-74, Summer.
    5. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, Elsevier, vol. 2(2), pages 111-120, July.
    6. Phillips, Peter C B & Ouliaris, S, 1990. "Asymptotic Properties of Residual Based Tests for Cointegration," Econometrica, Econometric Society, Econometric Society, vol. 58(1), pages 165-93, January.
    7. Hendry, David F, 1986. "Econometric Modelling with Cointegrated Variables: An Overview," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 48(3), pages 201-12, August.
    8. Sargan, John Denis & Bhargava, Alok, 1983. "Testing Residuals from Least Squares Regression for Being Generated by the Gaussian Random Walk," Econometrica, Econometric Society, Econometric Society, vol. 51(1), pages 153-74, January.
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    Cited by:
    1. Foders, Federico, 1998. "A note on economic growth and human capital in Eastern Europe," Kiel Working Papers 864, Kiel Institute for the World Economy.

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