Determinants of Argentina's External Trade

Journal of Applied Economics, Vol. 5, No. 1, pp. 19-57, May 2002

Posted: 13 Jul 2004

See all articles by Luis Catão

Luis Catão

International Monetary Fund (IMF)

Elisabetta Falcetti

European Bank for Reconstruction and Development (EBRD)

Abstract

Following the liberalization reforms of the late 80s and early 90s, several emerging market economies have experienced large and persistent trade deficits. This paper focuses on the Argentine experience, examining the extent to which trade imbalances in the 1990s resulted from income and relative price movements, as well as from shifts in foreign trade elasticities associated with structural changes. New estimates of export and import equations are presented using a broader set of variables than previous studies and distinguishing between intra and extra MERCOSUR trade. We find that considerable export sensitivity to world commodity prices, domestic absorption, and economic activity in Brazil, combined with a high income elasticity of imports, are key determinants of Argentina's trade balance.

Keywords: Argentina, foreign trade elasticities, international competitiveness, MERCOSUR

JEL Classification: F11, F14, F31

Suggested Citation

Catão, Luis and Falcetti, Elisabetta, Determinants of Argentina's External Trade. Journal of Applied Economics, Vol. 5, No. 1, pp. 19-57, May 2002, Available at SSRN: https://ssrn.com/abstract=564324

Luis Catão (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Elisabetta Falcetti

European Bank for Reconstruction and Development (EBRD) ( email )

One Exchange Square
London, EC2A 2EH
United Kingdom

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