A Case of a Persistent Disequilibrium Policy: Argentina since 2002
From the beginning of 2002 the Argentine economy underwent severe shocks. This was the consequence of a sharp depreciation of the currency and the legal and asymmetrical transformation of assets and liabilities from the US dollar to Argentine pesos. These shocks produced important wealth and income...
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2005
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| Acceso en línea: | http://sedici.unlp.edu.ar/handle/10915/164725 |
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I19-R120-10915-1647252024-04-11T20:01:59Z http://sedici.unlp.edu.ar/handle/10915/164725 A Case of a Persistent Disequilibrium Policy: Argentina since 2002 Baccino, Osvaldo 2005-11 2005 2024-04-11T18:36:41Z en Ciencias Económicas economía monetaria modelización econométrica From the beginning of 2002 the Argentine economy underwent severe shocks. This was the consequence of a sharp depreciation of the currency and the legal and asymmetrical transformation of assets and liabilities from the US dollar to Argentine pesos. These shocks produced important wealth and income effects which enhanced the economic depression that Argentina was experiencing since 1998. These effects have a serious impact in the long term behaviour of economic agents. In 2003 some recovery of economic activity was gathering momentum. In many circles there was a belief that the recovery implied a process of reverting the downward trend followed by the economy.They thought the economy was being normalised. However, many analysts from inside and outside the country disagreed with that view. They said that the recovery was a rebound movement produced after a very sharp fall. The present study concludes that in spite of the economic recovery that may take place for an extended period, the changes implied strong depressive modifications in the long run behaviour of economic agents. This trend exists even when the economic activity undergoes some reactivation. It reflects the long term influence of negative wealth effects. The measurement of these wealth effects is a very difficult task. First, the corresponding wealth variable must be adequately defined and it has also to be observable. Second, the shocks under analysis are not part of a recurrent phenomenon and there are not sufficient degrees of freedom to treat it statistically. However, in this paper the wealth effect was indirectly detected by examining the dynamic long and short term behaviour of aggregates like consumption and investment. Therefore, it seems plausible that positive income effects may coexist with a lasting negative wealth effect. This process was supported by a peculiar economic policy destined to keep a considerable undervaluation of the domestic currency. Some disequilibria were maintained through time in some parts of the economy with influences in the relative prices.. The conclusion of this paper is that the recovery did not imply a normalisation of the economy according to past standards. It was also something more than a rebound. The economy goes on reshaping itself in a different way by strengthening the exclusion of part of the productive structure. This might imply further increases in poverty, a persistent unemployment and a less diversified economy in the future. Summing up, the dynamic behaviour of the main aggregates allows the detection of the impacts of the wealth effects. This is the main point in this study. These influences have been captured by the models constructed in this paper Facultad de Ciencias Económicas Objeto de conferencia Objeto de conferencia http://creativecommons.org/licenses/by-nc-sa/4.0/ Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International (CC BY-NC-SA 4.0) application/pdf |
| institution |
Universidad Nacional de La Plata |
| institution_str |
I-19 |
| repository_str |
R-120 |
| collection |
SEDICI (UNLP) |
| language |
Inglés |
| topic |
Ciencias Económicas economía monetaria modelización econométrica |
| spellingShingle |
Ciencias Económicas economía monetaria modelización econométrica Baccino, Osvaldo A Case of a Persistent Disequilibrium Policy: Argentina since 2002 |
| topic_facet |
Ciencias Económicas economía monetaria modelización econométrica |
| description |
From the beginning of 2002 the Argentine economy underwent severe shocks. This was the consequence of a sharp depreciation of the currency and the legal and asymmetrical transformation of assets and liabilities from the US dollar to Argentine pesos.
These shocks produced important wealth and income effects which enhanced the economic depression that Argentina was experiencing since 1998. These effects have a serious impact in the long term behaviour of economic agents. In 2003 some recovery of economic activity was gathering momentum. In many circles there was a belief that the recovery implied a process of reverting the downward trend followed by the economy.They thought the economy was being normalised.
However, many analysts from inside and outside the country disagreed with that view.
They said that the recovery was a rebound movement produced after a very sharp fall.
The present study concludes that in spite of the economic recovery that may take place for an extended period, the changes implied strong depressive modifications in the long run behaviour of economic agents. This trend exists even when the economic activity undergoes some reactivation. It reflects the long term influence of negative wealth effects.
The measurement of these wealth effects is a very difficult task. First, the corresponding wealth variable must be adequately defined and it has also to be observable. Second, the shocks under analysis are not part of a recurrent phenomenon and there are not sufficient degrees of freedom to treat it statistically.
However, in this paper the wealth effect was indirectly detected by examining the dynamic long and short term behaviour of aggregates like consumption and investment.
Therefore, it seems plausible that positive income effects may coexist with a lasting negative wealth effect. This process was supported by a peculiar economic policy destined to keep a considerable undervaluation of the domestic currency. Some disequilibria were maintained through time in some parts of the economy with influences in the relative prices..
The conclusion of this paper is that the recovery did not imply a normalisation of the economy according to past standards. It was also something more than a rebound. The economy goes on reshaping itself in a different way by strengthening the exclusion of part of the productive structure. This might imply further increases in poverty, a persistent unemployment and a less diversified economy in the future.
Summing up, the dynamic behaviour of the main aggregates allows the detection of the impacts of the wealth effects. This is the main point in this study. These influences have been captured by the models constructed in this paper |
| format |
Objeto de conferencia Objeto de conferencia |
| author |
Baccino, Osvaldo |
| author_facet |
Baccino, Osvaldo |
| author_sort |
Baccino, Osvaldo |
| title |
A Case of a Persistent Disequilibrium Policy: Argentina since 2002 |
| title_short |
A Case of a Persistent Disequilibrium Policy: Argentina since 2002 |
| title_full |
A Case of a Persistent Disequilibrium Policy: Argentina since 2002 |
| title_fullStr |
A Case of a Persistent Disequilibrium Policy: Argentina since 2002 |
| title_full_unstemmed |
A Case of a Persistent Disequilibrium Policy: Argentina since 2002 |
| title_sort |
case of a persistent disequilibrium policy: argentina since 2002 |
| publishDate |
2005 |
| url |
http://sedici.unlp.edu.ar/handle/10915/164725 |
| work_keys_str_mv |
AT baccinoosvaldo acaseofapersistentdisequilibriumpolicyargentinasince2002 AT baccinoosvaldo caseofapersistentdisequilibriumpolicyargentinasince2002 |
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1807222782067474432 |