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Volume 53 / Social Sciences

ECONOMICS: ARGENTINA


GRACIELA LAURA KAMINSKY, Economist, Board of Governors of the Federal Reserve System, Washington, D.C.

THE WORKS ANNOTATED BELOW date from the 1987-92 period, and cover the following topics: 1) inflation and stabilization programs; 2) fiscal problems; 3) foreign debt problems; 4) income distribution and poverty; 5) trade policy and liberalization attempts; and 6) inefficiencies in the public sector, deregulation, and privatization.

Not surprisingly, given the bewildering increase in Argentina's inflation rate as well as the collapse of economic growth in the 1980s, most of the works available for review focus on macroeconomic stability, hyperinflation, and government deficits, and their effect on inflation and growth. Most of these works are descriptive in nature (e.g., see items bi 92000155 and bi 92000075), while others report detailed data on Argentina's fiscal situation which could be of great help to researchers in this area (e.g., see item bi 92000156). Some authors develop models to examine the reasons for the collapse of the stabilization programs implemented in the 1980s. An interesting paper in this category, by Helpman and Leiderman (item bi 91022147), explores the connection between budget deficits and the rate of inflation, the phenomenon of inflationary inertia and the role of exchange-rate management, and wage and price controls in the disinflation process. This last topic is of major importance because most of the stabilization programs implemented in Argentina relied very heavily on price and wage controls as well as on a fixed exchange rate system.

The Austral Plan as well as the 1979 so-called tablita program were accompanied by an initial expansion of private consumption followed by a later contraction. This experience is not idiosyncratic to Argentina but has been a phenomenon observed in many Latin American countries which has puzzled economists for some time. Reinhart and Vegh examine this issue using an intertemporal asset pricing model (item bi 93007653). The authors find that this consumption cycle may be the result of lack of credibility, in the sense that the public expects the program to be discontinued in the future. Finally, some other papers examine the long-run characteristics of inflation, output, and money. For example, Herrou-Aragón applies Sims' VAR technique to explore the relationship between output and money (item bi 90014499), and Sturzenegger uses the Blanchard-Quah technique to examine inflation and output growth (item bi 91025047). Interestingly, these papers find that demand shocks, both monetary and fiscal, explain only a small proportion of the fluctuations of real output.

Stimulated by a deadlock in foreign debt negotiations, a large number of the articles annotated below examine the macroeconomic effects of the external debt and possible solutions to the problem. The first issue is analyzed by Bekerman (item bi 91004298), who devotes special attention to the fiscal effect of foreign debt, and by Kaminsky and Pereira (item bi 93007572), who focus on the effect of the external transfer on economic growth. On the other hand, in an excellent book, Dornbusch and de Pablo (item bi 92000152) examine the effects on foreign debt of the stabilization programs implemented since 1976. Calvo and Kaminsky deal with the second issue in an article that examines whether debt relief was an implicit clause in the loan contracts signed in the 1970s (item bi 93007547).

Spurred by the deregulation of the economy announced in 1991 as well as by privatization of public enterprises, many articles have examined efficiency in the public sector as well as the effects of regulations and tax/subsidy incentives on economic activity. Among the former are a World Bank study which examines the education sector (item bi 92000157) and an article by García which analyzes efficiency in 11 public firms (item bi 92000083). Among the latter are two very interesting studies by the Fundación de Investigaciones Económicas Latinoamericanas which examine the effects on growth of government controls/intervention in the foreign exchange, labor, and capital markets (items bi 92000140 and bi 92000147); these last two studies provide an exhaustive data bank.

There is also a continuous interest in foreign trade and the liberalization attempts in 1977 and in the 1980s. For example, Azpiazu and Kosacoff use micro data to examine the evolution of industrial exports (item bi 91000012). Likewise, Gelbard examines the impact of the 1977 trade liberalization attempt on monopoly power and efficiency in the industrial sector (item bi 91006623).

Finally, there is an increasing number of papers that explore the evolution of income distribution and poverty in Argentina. For example, Ostiguy and Armstrong examine the evolution of consumption of food in Argentina during 1974-84 (item bi 92000142), and the Instituto Nacional de Estadística y Censos has published a major study on urban poverty based on a household survey (item bi 92000089).


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