Exploring The Role of Limited Commitment Constraints in Argentina’s "Missing Capital"

Abstract
We study why capital accumulation in Argentina was slow in the 1990s and 2000s, despite high productivity growth and low international interest rates. We show that limited commitment constraints introduce two mechanisms. First, the response of investment to a total factor productivity increase is muted and short-lived, while the response to a decrease is large and persistent. Second, unlike in a first-best economy, low international interest...
Paper Details
Title
Exploring The Role of Limited Commitment Constraints in Argentina’s "Missing Capital"
Published Date
Oct 11, 2019
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