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Short and long run determinants of private investment in Argentina

This study provides an empirical analysis of the macroeconomic factors that can potentially affect investment decisions in Argentina in a short, medium and long run perspective. Both the theory and the empirical literature are reviewed in order to identify a private investment function for the last three decades (1970-2000). The results suggest that investment decisions seem to be determined, in the short run, by shocks in returns (exchange rate, trade liberalization) and in aggregate demand. Besides, there is evidence of a “crowding-out” effect of public investment. In the long run, the capital accumulation path seems to be closely dependent on both well-developed financial and credit markets and on perspectives of fiscal sustainability.

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Article provided by Universidad del CEMA in its journal Journal of Applied Economics.

Volume (Year): VIII (2005)
Issue (Month): (November)
Pages: 389-406

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Handle: RePEc:cem:jaecon:v:8:y:2005:n:2:p:389-406
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  16. Froot, Kenneth A & Stein, Jeremy C, 1991. "Exchange Rates and Foreign Direct Investment: An Imperfect Capital Markets Approach," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1191-217, November.
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