Argentina’s unimpressive recovery: insights from a real business cycle approach
Argentina’s GDP increased 30% between 2002 and 2005, prompting optimistic assessments that the country had finally left behind its secular stagnation. However, this strong performance followed a sharp decline in economic activity and therefore could be the manifestation of a bounce-back effect with no lasting impact on Argentina’s mediocre long-run growth rates. The paper examines this conjecture with the quantitative discipline imposed by a Real Business-Cycle methodology and concludes that the 2002-05 expansion was not only a rebound, but also considerably weaker than the model predicts, a finding not consistent with upbeat views about the country’s long-run prospects.
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- Finn E. Kydland & Carlos E.J.M. Zarazaga, 2004. "Argentina's capital gap puzzle," Center for Latin America Working Papers 0504, Federal Reserve Bank of Dallas.
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