Dual equilibrium and growth cycle in Argentina

Jose Luis Nicolini-Llosa

International Review of Applied Economics, 2011, vol. 25, issue 2, pages 185-207

Abstract: Argentina's GDP growth cycle, tracing the high exchange rate volatility in 1970-2008, is discussed. Growth depends on foreign exchange availability. The country's comparative advantage is in agriculture, but manufactured exports are grow faster. Two remarkably different PPP exchange rates coexist - one appropriate for agriculture and one for manufacturing - destabilising the market exchange rate. Thus, two unstable growth equilibria coexist generating GDP fluctuations. Currency devaluation sets the cycle's ceiling and the end of devaluation sets the cycle's floor. Chronic government deficits widen the cycle, harming institutions and decelerating growth. A land tax to finance rural investment would facilitate a high and stable exchange rate (AR$/US$) and convergence to the high growth equilibrium.

Keywords: Argentina; business cycle; dual equilibrium; growth; balance of payments; development (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/02692171.2010.483462 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:taf:irapec:v:25:y:2011:i:2:p:185-207

Ordering information: This journal article can be ordered from
http://www.tandf.co.uk/journals/subscription.asp

Access Statistics for this article

International Review of Applied Economics is edited by Malcolm Sawyer, Philip Arestis, Keith Cowling and Ron Smith

More articles in International Review of Applied Economics from Taylor and Francis Journals
Series data maintained by Michael McNulty ().