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Distributive Effects of Balance-of-Payments Constraints: A Theoretical and Empirical Analysis of Argentina (2004-2022)

Author

Listed:
  • Dvoskin, Ariel

    (Central Bank of Argentina and National Scientific and Technical Research Council, Argentina)

  • Feldman, Germán David

    (Central Bank of Argentina, Buenos Aires, Argentina)

  • Garegnani, María Lorena

    (Central Bank of Argentina and University of La Plata, Argentina)

Abstract

The paper studies the distributive effects of the external constraint in Argentina during the 2004-2022 period. We first develop a model inspired by the classical tradition - exogenous distribution - for a small (price taker) open economy with technical and financial dependencies under foreign exchange controls to examine the negative effects of exchange rate depreciations on real wage. Then, we use a Vector Error Correction Model (VECM): a) to show the long-run negative relationship between the real exchange rate and real wages in Argentina during the period under analysis; b) to identify the autonomous - or weakly exogenous - role played by the nominal exchange rate in the determination of income distribution; and, c) to capture the influence that, in the short-run, the financial exchange rate exerts on the official exchange rate.

Suggested Citation

  • Dvoskin, Ariel & Feldman, Germán David & Garegnani, María Lorena, 2024. "Distributive Effects of Balance-of-Payments Constraints: A Theoretical and Empirical Analysis of Argentina (2004-2022)," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 77(2), pages 233-264.
    • Handle: RePEc:ris:ecoint:0970
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    More about this item

    Keywords

    Argentina; External Constraint; Income Distribution; Small Open Economy; Vector Error Correction Model;
    All these keywords.

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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