Banking and finance in Argentina in the period 1900-35
From 1900 to 1935, Argentina evolved from an economy highly dependent on external, primarily British, finance to one more nearly self-sufficient. We examine the failure of domestic finance to adequately fill the void left by the decline of London and the breakdown of the world financial system in the interwar period, when neither the Buenos Aires Bolsa nor the private domestic banks developed rapidly enough to fully replace British investors as efficient channels for financing private investment. One consequence is that Argentine investable funds were increasingly concentrated in a single ...
Argentina's recovery and "excess" capital shallowing of the 1990s
The paper examines Argentinas economic expansion in the 1990s through the lens of a parsimonious neoclassical growth model. The main finding is that investment remained considerably weaker than what the model would have predicted. The resulting excessive capital shallowing could be identified as a weakness of the rapid economic growth of the 1990s that may have played a role in Argentinas ultimate inability to escape the crisis that started to unfold towards the end of that decade. ; Economic Research Working Paper 0204
Argentina's lost decade and subsequent recovery: hits and misses of the neoclassical growth model
We examine the economic depression that Argentina suffered in the 1980s, as well as the subsequent recovery, from the perspective of growth theory, taking total factor productivity as exogenous. The predictions of the neoclassical growth model conform rather well with the evidence for the "lost decade" depression and at the same time point to a puzzle: Investment did not recover in the subsequent decade of the 1990s nearly as fast as it should have according to that same model.
Choosing among rival poverty rates : some tests for Latin America
Poverty rates are now widely available, but are they reliable? Wide variations in estimated poverty rates for the same poverty line, year and country reflect an underlying reality: there is no widely accepted procedure for estimating national poverty rates. This paper proposes a simple, ex post procedure for selecting poverty rates that have certain desirable properties. Absolute poverty measures, estimated uniformly across countries, should be correlated with nonmonetary indicators that reflect the consequences of physical deprivation (e.g., malnutrition, birth rates, school attendance). A ...
Is tighter fiscal policy expansionary under fiscal dominance? Hypercrowding out in Latin America
We test for hypercrowding out as a signal of market concerns over fiscal dominance in five Latin American countries. Hypercrowding out occurs when fiscally dominated governments domestic credit demands are perceived as so intrusive to a nations financial system that a move towards fiscal surplus lowers interest rates and increases growth. We sample five Latin American countries to test for these relationships. Judged by the results of vector error correction models, three nations test clearly positive, suggesting market concern despite their recent efforts towards fiscal balance.
We present a model in which the importance of financial intermediation for development can be measured. We generate financial differences by varying the degree to which contracts can be enforced. Economies where enforcement is poor employ less capital and less efficient technologies. Yet, accounting for all the observed dispersion output requires a higher capital share or a lower elasticity of substitution between capital and labor than usually assumed. We find that the effects of changes in those technological parameters on output are markedly larger when financial frictions are present. ...
Limited enforcement and the organization of production
This paper describes a dynamic, general equilibrium model designed to assess whether contractual imperfections in the form of limited enforcement can account for international differences in the organization of production. In the model, limited enforcement constrains some agents to operate establishments below their optimal scale. As a result, economies where contracts are enforced more efficiently tend to be richer and emphasize large scale production. Calibrated simulations of the model reveal that these effects can be large and account for a sizeable part of the observed differences in ...
Currency competition and inflation convergence
All agree partial dollarization or currency substitution is a legacy of past inflation and exchange rate instability. Some argue partial dollarization contributes to exchange rate instability. However, if Central Banks respond to dollarization by lowering money growth and maximizing seigniorage revenue, inflation falls and converges on dollar inflation rates. We present a simple model of currency competition with open capital markets to illustrate these points. Empirical tests for Latin America and about twenty other countries suggest that dollarization is both a legacy of past inflation and ...
Are labor markets segmented in Argentina? a semiparametric approach
A large part of the theoretical literature on informal economic activities in developing nations is founded on the assumption that labor markets are segmented. In this paper, we evaluate this premise with data from Argentina's permanent household survey for the 1993-1995 time period. We consider various definitions of informality based on the benefits mandated by Argentina's labor laws. We find that average wages are significantly higher in the formal sector than in the informal sector. We proceed to use a matching estimator to correct for the possible endogeneity of employment outcomes. ...