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Empirical Assessment of Two Testable Hypotheses of the Sraffian Supermultiplier for Argentina, 1993–2021

Author

Listed:
  • Ariel Dvoskin

    (Central Bank of Argentina)

  • Florencia Médici

    (CONICET)

Abstract

In recent times, Sraffian Supermultiplier Model (SSM) (Freitas & Serrano, 2015; Serrano, 1995; Serrano etal., 2019) has become prominent in both theoretical and empirical discussions within the demand-led-growth framework. The SSM has three distinctive features: the rate of growth of output is determined by the rate of growth of non-capacity generating autonomous expenditures; investment is an induced variable; and distribution is exogenous.This manuscript aims to test the first two features through different empirical exercises for Argentina, from 1993 to 2021. First, we estimate a Vector Equilibrium Correction Model using theJohansen method for cointegration analysis (Johansen, 1988, 1991) to provide evidence that the growth rate of output ultimately dependents on the growth rate of autonomous expenditures. The econometric method allows us to show that the autonomous components of demand are weakly exogenous variables, with output adjusting to long-run deviations between these autonomous components and GDP. The second exercise tests the existence of a mechanism that adjusts productive capacity to demand, based on the flexible accelerator principle. We use a VAR analysis to show that, in line with the SSM, investment share is Granger-caused by output.

Suggested Citation

  • Ariel Dvoskin & Florencia Médici, 2023. "Empirical Assessment of Two Testable Hypotheses of the Sraffian Supermultiplier for Argentina, 1993–2021," BCRA Working Paper Series 2023112, Central Bank of Argentina, Economic Research Department.
    • Handle: RePEc:bcr:wpaper:2023112
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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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