Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7364182 | Journal of International Economics | 2016 | 12 Pages |
Abstract
This paper reviews the baseline framework for the analysis of emerging economies. Using Argentinean data, I estimate a small open economy model with stochastic trend, working capital constraint and augmented with time-varying parameters. I find that “structural” technological and financial parameters of one-sector model are time-varying during 1936-2006. Time-varying parameters correlate with the real exchange rate, suggesting potential misspecification of the one-sector model. Therefore, I propose a two-sector model that endogenously accounts for the real exchange rate. In this model, stationary productivity shocks and the country premium together explain a large share of the variability observed in the data.
Related Topics
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Authors
Hernán D. Seoane,