with Menelaos Karanasos and Bin Tan
May 2008
Argentina is the only country in the world that was “developed” in 1900
and “developing” in 2000. Although various
underlying reasons have been identified (principally among them,
political instability, financial development, inflation,
trade openness, and international financial integration), no study has
quantitatively assessed their relative importance.
This paper tries to fill this gap. We use the power-ARCH framework and
annual data since 1896 to study how important
are these factors vis-à-vis both growth and growth volatility. Our
results suggest that financial development, trade
openness and political instability are the main factors, with important
differences in terms of their short versus long-run
behavior.
For presentation at the CEPR Conference on "Finance, Growth, and the Structure
of the Economy’"
Barcelona, 8-9 May 2008
Suggested soundtrack for this paper is here
(a tango and called "Argentina First World")