Short and Long Run Determinants of Private Investment in Argentina

Journal of Applied Economics. Vol. 8, No. 2, pp. 389-406, November 2005

Posted: 28 Feb 2006

See all articles by Pablo Acosta

Pablo Acosta

University of Illinois at Urbana-Champaign - Department of Economics

Andrés Loza

Universidad Argentina de la Empresa (UADE)

Abstract

This study provides an empirical analysis of the macroeconomic factors that can potentially affect investment decisions in Argentina in a short, medium and long run perspective. Both the theory and the empirical literature are reviewed in order to identify a private investment function for the last three decades (1970-2000). The results suggest that investment decisions seem to be determined, in the short run, by shocks in returns (exchange rate, trade liberalization) and in aggregate demand. Besides, there is evidence of a "crowding-out" effect of public investment. In the long run, the capital accumulation path seems to be closely dependent on both well-developed financial and credit markets and on perspectives of fiscal sustainability.

Keywords: investment, macroeconomic instability, crowding-out, Argentina

JEL Classification: E22, H54, O16, O23

Suggested Citation

Acosta, Pablo and Loza, Andrés, Short and Long Run Determinants of Private Investment in Argentina. Journal of Applied Economics. Vol. 8, No. 2, pp. 389-406, November 2005, Available at SSRN: https://ssrn.com/abstract=869046

Pablo Acosta (Contact Author)

University of Illinois at Urbana-Champaign - Department of Economics ( email )

410 David Kinley Hall
1407 W. Gregory
Urbana, IL 61801
United States

Andrés Loza

Universidad Argentina de la Empresa (UADE) ( email )

1016 Buenos Aires
Argentina

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