Growth and the Determinants of TFP in Argentina: 1960-2008

Abstract

Argentina has exhibited great trend and cyclical GDP and TFP growth rate variations during the last 50 years. This paper presents new estimates for Argentina‟s sources of growth and new measures for aggregate capital and TFP in the 1960-2008 time-span. An appreciation is done of the two basic methodologies to estimate aggregate capital –permanent inventory method and hedonic prices. Capital series derived by Heymann, et al (2007) are adjusted by utilization and labor input series by hours worked. The paper presents seven TFP series based on combinations of the latter. Five basic economic cycles are identified in the period of study that coincide with other authors‟ estimates analyzing deviations of the GDP series from its trend. Special attention is paid to the last two recovery cycles (1990-1998 and 2002-2008), in order to compare and analyze growth dynamics, given the differences in economic policies during the occurrence of the recoveries. Econometric evidence is then presented for the TFP in Argentina, considering cyclical (terms of trade and real exchange rate undervaluation) and institutional variables (macroeconomic instability and major government changes).