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Argentina’s unimpressive recovery: insights from a real business cycle approach

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  • Carlos E. Zarazaga

Abstract

Argentina?s GDP increased 30% between 2002 and 2005, prompting optimistic assessments that the country had finally left behind its secular stagnation. However, this strong performance followed a sharp decline in economic activity and therefore could be the manifestation of a bounce-back effect with no lasting impact on Argentina?s mediocre long-run growth rates. The paper examines this conjecture with the quantitative discipline imposed by a Real Business-Cycle methodology and concludes that the 2002-05 expansion was not only a rebound, but also considerably weaker than the model predicts, a finding not consistent with upbeat views about the country?s long-run prospects.

Suggested Citation

  • Carlos E. Zarazaga, 2006. "Argentina’s unimpressive recovery: insights from a real business cycle approach," Working Papers 0606, Federal Reserve Bank of Dallas.
    • Handle: RePEc:fip:feddwp:0606
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    References listed on IDEAS

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    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
    3. Kydland, Finn E., 2004. "Quantitative Aggregate Theory," Nobel Prize in Economics documents 2004-4, Nobel Prize Committee.
    4. William A. Brock & Leonard J. Mirman, 2001. "Optimal Economic Growth And Uncertainty: The Discounted Case," Chapters, in: W. D. Dechert (ed.), Growth Theory, Nonlinear Dynamics and Economic Modelling, chapter 1, pages 3-37, Edward Elgar Publishing.
    5. Finn E. Kydland & Carlos E. Zarazaga, 2004. "Argentina's capital gap puzzle," Center for Latin America Working Papers 0504, Federal Reserve Bank of Dallas.
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