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Should the Financial Sphere be Included in Empirical Macro-CGE Models? The Case of Economic Liberalization in Argentina

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  • Debowicz, Dario

Abstract

The significant real effects arising from the present international financial crisis suggest that the workings of the financial sphere significantly affect the value of social production, the distribution of income and wealth, and the magnitude of income poverty, all important social welfare indicators. Reflecting this, should macro CGE models take the financial dimension into account? To shed some light on this issue, I extend the IFPRI Standard Model to make it dynamic and take consideration of the financial sphere, and then I compare the outcomes of historical simulations coming from these models against observed variables for the Argentinean economy in the 1991-2006 period. Preliminary results suggest that the inclusion of the financial dimension may help the CGE model to historically track observed variables.

Suggested Citation

  • Debowicz, Dario, 2009. "Should the Financial Sphere be Included in Empirical Macro-CGE Models? The Case of Economic Liberalization in Argentina," Conference papers 331891, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331891
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