istributive Effects of Balance-of-Payments Constraints: A Theoretical and Empirical Analysis of Argentina (2004-2022)

ARIEL DVOSKIN; FELDMAN, GERMÁN DAVID; GAREGNANI, LORENA

International Economics

Chamber of Commerce of Genova

Lugar: Genova; Año: 2023

2499-8265

The paper studies the distributive effects of the external constraint in Argentina during the2004-2022 period. We first develop a model inspired by the classical tradition − exogenousdistribution − for a small (price taker) open economy with technical and financial dependenciesunder foreign exchange controls to examine the negative effects of exchange rate depreciationson real wage. Then, we use a Vector Error Correction Model (VECM): a) to show the long-runnegative relationship between the real exchange rate and real wages in Argentina during theperiod under analysis; b) to identify the autonomous − or weakly exogenous − role played by thenominal exchange rate in the determination of income distribution; and, c) to capture theinfluence that, in the short-run, the financial exchange rate exerts on the official exchange rate.