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A Cointegration Analysis on the Principle of Effective Demand in Argentina (1980-2007)

Author

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  • Florencia Médici

    (National University of Moreno - University of Buenos Aires)

Abstract

The aim of this paper is to evaluate the empirical validity of the principle of the effective demand in the long run in Argentina from 1980 to 2007 using the Sraffian Supermultiplier model (Serrano, 1995). This will be done through the cointegration analysis using the Johansen method. The results of the evaluation show that the demand components have permanent effects in the long run and that there is a positive causality from final demand autonomous components towards the product. Furthermore, an estimate of both the short and the long run dynamics through an Error-Correction Model is presented. Most empirical studies in which income is determined by demand work with exports-led model à la Thirlwall (1999, 2000). Instead, not only the exports but also both the government and the non-salaried private expenditures are included in this article.

Suggested Citation

  • Florencia Médici, 2011. "A Cointegration Analysis on the Principle of Effective Demand in Argentina (1980-2007)," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(61-62), pages 103-137, January -.
    • Handle: RePEc:bcr:ensayo:v:1:y:2011:i:61-62:p:103-137
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    File URL: http://www.bcra.gov.ar/pdfs/investigaciones/61_62_Medici.pdf
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    More about this item

    Keywords

    Argentina; cointegration; economic growth; effective demand; gross domestic product;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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