Growth Capacity of Argentina in the Long Term
Keywords:
Production capacity, product gapAbstract
Argentina grew 39% between 2003 and 2006. Many circumstances generated this impressive
performance but one of them was decisive: the existence of idle productive capacity after a four
year recession. Thus, the permanent reduction of this idle capacity during the last four years poses two important and related questions: “how fast can the economy grow in the short term?” and “what is the long run growth rate?” To answer both of them we estimate Argentina’s potential GDP and the corresponding output gap using a production function approach. The main conclusion is that in order to attain a 4% long run growth rate the economy needs more and better investment than the one registered today.
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Ensayos de Política Económica