IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

The macroeconomics of the public sector deficit : the case of Argentina

Listed author(s):
  • Rodriguez, Carlos Alfredo

Argentina has had a quarter century without growth at a time of rapid economic growth in the rest of the world. This paper looks at the role that public sector behavior, particularly government spending, taxation and deficit financing, may have had on the economic stagnation in Argentina. Government spending declined when the final crisis of the Argentine economy began in 1982, but more because of resource constraints than deliberate political action. The government ran a primary deficit every year from 1961 to 1989, so it issued money and interest-bearing debt. As a result, the economy experienced high real interest rates and inflation. Despite heavy fiscal pressure, fiscal spending has continued to grow, systematically exceeding revenues. From 1964 to 1975, the deficit was financed by creating money; with the fall of Peron and the beginning of a military regime, debt financing became significant. The regression study in this report shows that every 1 percent of primary deficit is financed with 0.7 percent of revenue from creating money. Public debt plays a peculiar role in Argentina's finances. The central bank has become the chief borrower of about 80 percent of the private banks'lending power. In this context, a policy of tight money to reduce aggregate demand basically increases the transfers from the public to the private sector because of the higher deficit that the rise in interest rates generates.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 632.

in new window

Date of creation: 31 Mar 1991
Handle: RePEc:wbk:wbrwps:632
Contact details of provider: Postal:
1818 H Street, N.W., Washington, DC 20433

Phone: (202) 477-1234
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

in new window

  1. Carlos A. Rodríguez, 1990. "Managing Argentina's External Debt: The Contribution of Debt Swaps," CEMA Working Papers: Serie Documentos de Trabajo. 68, Universidad del CEMA.
  2. Aquiles A. Almansi & Carlos A. Rodríguez, 1990. "Reforma Monetaria y Financiera en Hiperinflación," CEMA Working Papers: Serie Documentos de Trabajo. 67, Universidad del CEMA.
  3. Calvo, Guillermo A & Rodriguez, Carlos Alfredo, 1977. "A Model of Exchange Rate Determination under Currency Substitution and Rational Expectations," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 617-625, June.
  4. Rodriguez, Carlos Alfredo, 1989. "Macroeconomic policies for structural adjustment," Policy Research Working Paper Series 247, The World Bank.
  5. Frenkel, Jacob A & Razin, Assaf, 1986. "Fiscal Policies in the World Economy," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 564-594, June.
  6. Rodriguez, Carlos Alfredo, 1982. "The Argentine stabilization plan of December 20th," World Development, Elsevier, vol. 10(9), pages 801-811, September.
  7. Dornbusch, Rudiger, 1974. "Tariffs and nontraded goods," Journal of International Economics, Elsevier, vol. 4(2), pages 177-185, May.
  8. Rudiger Dornbusch & Juan Carlos de Pablo, 1987. "Argentina: Debt and Macroeconomic Instability," NBER Working Papers 2378, National Bureau of Economic Research, Inc.
  9. Jacob A. Frenkel & Carlos A. Rodriguez, 1982. "Exchange Rate Dynamics and the Overshooting Hypothesis," NBER Working Papers 0832, National Bureau of Economic Research, Inc.
  10. Roque B. Fernández, 1982. "La Crisis Financiera Argentina: 1980-1982," CEMA Working Papers: Serie Documentos de Trabajo. 35, Universidad del CEMA.
  11. Carlos A. Rodríguez & Larry A. Sjaastad, 1979. "El Atraso Cambiario en Argentina: Mito o Realidad?," CEMA Working Papers: Serie Documentos de Trabajo. 2, Universidad del CEMA.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:632. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.