Business Cycle Accounting for Argentina Utilizing Capital Utilization

Working papers | 2008 | N 30

Abstract

We use a variation on the business cycle accounting method of Chari, Kehoe and McGrattan to study the business cycle in Argentina from 1972 to 2006. We use capital utilization as a household decision variable to be able to better extract the wedge that functions as a tax on capital. Applying the model to Argentina, we find that all four wedges are important in explaining the evolution of output over this period (although net exports is the least important). The major political subperiods can be charaterized by the relative importance of each wedge. We compare the results of this technique to the standard narrative.

JEL classification: D24, F41, F44