Determinants of Argentina's External Trade

Luis Catão and Elisabetta Falcetti

Journal of Applied Economics, 2002, vol. 5, issue 1, 19-57

Abstract: Following the liberalization reforms of the late 80s and early 90s, several emerging market economies have experienced large and persistent trade deficits. This paper focuses on the Argentine experience, examining the extent to which trade imbalances in the 1990s resulted from income and relative price movements, as well as from shifts in foreign trade elasticities associated with structural changes. New estimates of export and import equations are presented using a broader set of variables than previous studies and distinguishing between intra and extra MERCOSUR trade. We find that considerable export sensitivity to world commodity prices, domestic absorption, and economic activity in Brazil, combined with a high income elasticity of imports, are key determinants of Argentina's trade balance.

Date: 2002
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DOI: 10.1080/15140326.2002.12040570

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