Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 2019 erstellt
Description:
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 rates may reduce capital accumulation, because they increase the relevance of future commitment constraints. A quantitative implementation of the model economy shows that the two mechanisms are quantitatively important for the dynamics of Argentina's capital accumulation. The model accounts for between 50% and 85% of the capital missing from Argentina in the two decades mentioned above, relative to what it would be in the absence of the limited commitment frictions.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at "http://www.nber.org/papers/w26359"