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A Cointegration Analysis on the Principle of Effective Demand in Argentina (1980-2007)

  • Florencia Médici

    ()

    (National University of Moreno - University of Buenos Aires)

The aim of this paper is to evaluate the empirical validity of the principle of the effective demand in the long run in Argentina from 1980 to 2007 using the Sraffian Supermultiplier model (Serrano, 1995). This will be done through the cointegration analysis using the Johansen method. The results of the evaluation show that the demand components have permanent effects in the long run and that there is a positive causality from final demand autonomous components towards the product. Furthermore, an estimate of both the short and the long run dynamics through an Error-Correction Model is presented. Most empirical studies in which income is determined by demand work with exports-led model à la Thirlwall (1999, 2000). Instead, not only the exports but also both the government and the non-salaried private expenditures are included in this article.

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Article provided by Central Bank of Argentina, Economic Research Department in its journal Ensayos Económicos.

Volume (Year): 1 (2011)
Issue (Month): 61-62 (January - June)
Pages: 103-137

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Handle: RePEc:bcr:ensayo:v:1:y:2011:i:61-62:p:103-137
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  1. H. Sonmez Atesoglu, 1997. "Balance-of-Payments-Constrained Growth Model and Its Implications for the United States," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 19(3), pages 327-335, April.
  2. Schefold, B, 1988. "The Dominant Technique in Joint Production Systems," Cambridge Journal of Economics, Oxford University Press, vol. 12(1), pages 97-123, March.
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  4. Awokuse, Titus O., 2002. "Is The Export-Lead Growth Hypothesis Valid For Canada?," Staff Papers 15823, University of Delaware, Department of Food and Resource Economics.
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  8. Lavoie, M., 1992. "The Kaleckian Model of Growth and Distribution and its Neo-Ricardian and Neo-Marxian Critiques," Working Papers 9201e, University of Ottawa, Department of Economics.
  9. Anthony Philip Thirlwall, 1979. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 32(128), pages 45-53.
  10. Trezzini, Attilio, 1995. "Capacity Utilisation in the Long Run and the Autonomous Components of Aggregate Demand," Contributions to Political Economy, Oxford University Press, vol. 14(0), pages 33-66.
  11. Kaldor, Nicholas, 1971. "Conflicts in National Economic Objectives," Economic Journal, Royal Economic Society, vol. 81(321), pages 1-16, March.
  12. Schlicht, Ekkehart, . "Isolation and Aggregation in Economics," Monographs in Economics, University of Munich, Department of Economics, number 3.
  13. Nelson H. Barbosa-Filho, 1999. "A Note on the Theory of Demand-Led Growth," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 1999-06, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
  14. Nelson H. Barbosa Filho, 2001. "Effective Demand and Growth: An Analysis of the Alternative Closures of Keynesian Models," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 2001-05, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
  15. Anthony P. Thirlwall, 2011. "Balance of payments constrained growth models: history and overview," PSL Quarterly Review, Economia civile, vol. 64(259), pages 307-351.
  16. Jorge Carrera & Mariano Féliz & Demian Panigo, 1999. "Una medición de los canales de transmisión de las fluctuaciones económicas. El caso de Argentina y los Estados Unidos," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0(4), pages 77-118.
  17. H. Sonmez Atesoglu, 1993. "Balance-of-Payments-Constrained Growth: Evidence from the United States," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 15(4), pages 507-514, July.
  18. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
  19. John S. L. McCombie, 1997. "On the Empirics of Balance-of-Payments-Constrained Growth," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 19(3), pages 345-375, April.
  20. Serrano, Franklin, 1995. "Long Period Effective Demand and the Sraffian Supermultiplier," Contributions to Political Economy, Oxford University Press, vol. 14(0), pages 67-90.
  21. George K. Zestos & Xiangnan Tao, 2002. "Trade and GDP Growth: Causal Relations in the United States and Canada," Southern Economic Journal, Southern Economic Association, vol. 68(4), pages 859-874, April.
  22. Pierangelo Garegnani & Antonella Palumbo, 1997. "Accomulation of capital," Departmental Working Papers of Economics - University 'Roma Tre' 0002, Department of Economics - University Roma Tre.
  23. Juan Carlos Moreno-Brid, 1999. "Mexico's Economic Growth and the Balance of Payments Constraint: A cointegration analysis," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(2), pages 149-159.
  24. Oscar de-Juan, 2005. "Paths of accumulation and growth: Towards a Keynesian long-period theory of output," Review of Political Economy, Taylor & Francis Journals, vol. 17(2), pages 231-252.
  25. Trezzini, Attilio, 1998. "Capacity Utilisation in the Long Run: Some Further Considerations," Contributions to Political Economy, Oxford University Press, vol. 17(0), pages 53-67.
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