Saturday, February 23, 2013

Growth in Argentina, again

So again, because some didn't get the memo. How 'bad' has been Argentina's performance since the crisis in 2002? Well if you use the numbers put out by Orlando Ferreres, not the government official data, with inflation at around 25% or so, what you get is the graph below.
Note that the average rate of growth in 2003-2012 is about 5.8% better than at any time in the post-war period (in fact, in recorded history). In the neoliberal era the rate of growth was 0.2% between 1976 and 1989, and 1.9 between 1990 and 2002, while in the State-led growth period it was a healthy 3.8%. 'Nough said. These are not opinions. Simply the facts. And no there is NO problem with these measures. These are the data use by the critics of the government.

This is not say that everything is fine in Argentina. But certainly the country does not need a return to the failed policies of the Washington Consensus.

34 comments:

  1. Hmm very poor text overall

    You credit the growth retake to "keynesian policies" and not the price of soybeans, you lie that the neoliberal period started before it actually did to pretend that kirchnerist policies haven't failed before

    A very different story would be that after decades of populist governments (some very very short periods of pro-market economies) Menem came and implemented liberalizing reforms, was able to reduce inflation and make the economy grow again.

    Although, he did have the bad luck of having one and a half decade of cheap commodity prices and the mistake to adobt an exchange rate with very little flexibility..

    the retake is all about external factors despite the government creating semi-hyperinflation because demand inflation doesn't exist, and interest rates are an exogenous variable that exists to make the public debt worse.. or sadomasoquism

    (btw i'm not a russian girl, this is DILMA in her terrorist days.. and the victims are all of us)

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    1. "semi-hyperinflation"

      No. Twenty-six percent is high, but it is simply not in the same ballpark as a true hyperinflation. Look up any actual instance of hyperinflation.

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    2. You don't seem to know much about inflation, hyperinflation or Latin America. I suggest you read this paper on inflation http://www.academia.edu/2634094/Money_and_Inflation. Dilma was a member of a group that tried to bring down a dicatorship, not a terrorist.

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    3. That is a little mischaracterization of Dilma. She was a member of a group that wanted to have a communist dictatorship in Brazil.

      But I think we should not judge her for that, that was the past. We should judge her for the present - as the pathetic joke, absolutely clueless president she is.

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    4. Anônimo I disapprove of your hurling insults on the net (shame on you). My views on Dilma are that she has accepted macro policies, particularly fiscal, that have been too conservative and lead to lower rates of growth (by the way the same is true for Argentina since last year). But a lot of things have improved, and that's why she democratically won the election.

      Your views and debate are most welcome. Please keep it polite.

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    5. That is madness to claim that Dilma had conservative fiscal policies. Her fiscal policy is if anything too expansionary and that is why Brazil is dealing with competitive problems and high inflation right now.

      Conservative fiscal policy would have entailed at a minimum abolishing BNDES, running fiscal surpluses in the good times (as when unemployment is at a historical low) and not expropriating minority shareholders of state-owned companies in order to 'maquilar' the inflation rate.

      Finally, I cannot help but call Dilma pathetic. I feel ashamed of having her, Mantega, Augustin, Coutinho and Barbosa at the commanding heights of the Brazilian economy. That is a C team and the results show.

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    6. You don't even get the dynamics within the government. Arno Agustin is for fiscal adjustment. Nelson Barbosa is not. Read this http://franklinserrano.files.wordpress.com/2012/08/desacelerac3a7c3a3o_rudimentar__brasil_summa_serrano_2012_28_0-8_2012.pdf

      Yeah the A team was with FHC, and those were fantastic years!

      By the way, this is the last one I let go. Any other epithet about people you don't agree (pathetic joke or whatever) will be simply deleted and classified as spam.

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    7. FHC and Lula's first team were A teams, yes sir. There is no comparison. When FHC and the A team rolled out Plano Real, Mantega was talking about sectorial chambers. The end of Petrobras monopoly was FHC's work. The regulatory framework that stalled the pre-salt development was Dilma's work. When FHC came to power there was no stopping state governments from spending without restraint. FHC's government passed the fiscal responsibility law that controlled runaway spending by state governments. Arminio Fraga and company introduced the inflation targeting framework that allowed us to have low inflation and a countercyclical response to the 2008 crisis; Dilma has tried to undermine that framework ever since she was a minister of Lula and now she may have achieved it.

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    8. We will agree to disagree on this one.

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  2. I know what hyperinflation is, it was just a figure of speech

    managin to have nearly 30% inflation is a major failure of policy making, wether you like it or not

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    1. OK, forgive me for thinking you meant what you said.

      "managin to have nearly 30% inflation is a major failure of policy making, wether you like it or not"

      Assertion is easy, and your "wether" is doing a lot of the work there.

      I have little acquaintance with the Argentinian matters. Latin American countries receive shamefully short shrift in the US press (though I do try to keep abreast of what's going on in Mexico). However, it is incumbent on you to demonstrate that inflation is a real problem. I would suggest that it's more of what Heidegger called a "pseudo-problem". It's an annoyance. To the extent that it transfers wealth from creditors to debtors, I'd argue it's a good thing (this was the orthodox conservative position before 1873, by the way). Policy making should be judged primarily on three criteria: prevalence of unemployment; typical wage rates for marginal workers; the status of the laborer and his/her ability to influence his/her working conditions. Inflation? Meh.

      Not that there's any point arguing here.

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    2. Will, you clearly do not have acquaintance with Argentinean matters or with the cost of living under high inflation. Inflation is a heavy burden. It changes everything. Firms' profits become more dependent on their treasurer's management than on innovation or offering better products. Financial intermediation is destroyed so new business cannot scale up and older established incumbents earn rents. It also hurts the poor more than the rich, as the latter usually have ways to protect their purchasing power (the rich can afford to hold less of their wealth in liquid assets, they often have access to foreign currency etc).

      Thirty percent inflation is a huge policy making failure.

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    3. Wow. You're funny. I lived in Brazil (while travelling to Argentina all the time) in the 1980s, the high inflation period. And I do live and work in Buenos Aires right now. I'll post my paper on Argentine inflation at some point before the end of the year. Inflation here is due to nominal depreciation and wage resistance.

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    4. "Wow. You're funny. I lived in Brazil (while travelling to Argentina all the time) in the 1980s, the high inflation period. And I do live and work in Buenos Aires right now."

      I know. I was talking to Will who thinks that inflation is a mere annoyance.

      "I'll post my paper on Argentine inflation at some point before the end of the year. Inflation here is due to nominal depreciation and wage resistance."

      I wonder where does the nominal depreciation come from...

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    5. Not much space to wonder. It has been managed.

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    6. The only thing that is 'managed' is your government attempt to avoid a total collapse of the peso, by imposing exchange rate restrictions of the 1960s... That is like a drunk man driving at 100 km/h and with his eyes shut, but 'with the hands on the wheel'...

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    7. Again we will agree to disagree. You run very fast out of arguments.

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  3. Never mind. Inflation is on the way down now that prices are frozen. It is fail proof :)

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    1. Actually no. I have a post here in which I suggest that to work price controls need large bureaucracies. That by the way is the conclusion of the book by Hugh Rockoff on the subject. But I doubt you've read much about the topic.

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    2. Don't you recognize sarcasm? Price controls are a very stupid way to control inflation. It does not control inflation, but it disrupts and distorts the real economy. But that is no news, any Brazilian or Argentinean should know that.

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    3. Nope, they don't. Your understanding of price controls is very primitive. They do work under certain conditions and did work during second world war in the US. Read Rocoff's book, and also what Galbraith, who managed them back them, wrote about it.

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    4. This is madness. That was a war economy. The government had the power to round up boys and send them to die in Europe. Consumer goods were rationed. If you think that the war experience has any relevance for an economy in peace, don't cry for me Argentina...


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    5. Understanding what does and does not work with price controls is always relevant, even in different circumstances. You might have noticed that in economics we do not have labs. So we do what we can. Did you read the book, or you just talk about the period without having studied at all?

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    6. You have a fetish with this I-read-this-book-how-about-you. I have not read Rockoff's book. But I know as an economist and observer about the distortions and disruptions of price controls. I am also absolutely amazed that there are still in powerful people in Latin America who are so mad not to see the destructive consequences of price controls as an inflationary control measure. You seem to like that, so enjoy it.

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    7. Yep. Not fetishism. But you do talk without knowledge.

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  4. in the heterodox dimension, Dilma is fiscally conservative.. that's why its not working!!

    bahahahahaha

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    1. Actually you're wrong. On the size of the fiscal adjustment read this http://franklinserrano.files.wordpress.com/2012/08/desacelerac3a7c3a3o_rudimentar__brasil_summa_serrano_2012_28_0-8_2012.pdf In Portuguese I'm sorry to say.

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  5. Please check the numbers of 2012 and tell me how is that contraction.. Its for your own credibility's sake



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    1. Did you read the paper? Public investment collapsed in 2011, falling by 12% in real terms (p. 15).

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    2. But not total expenditure. Public investment collapsed because the priority of team PT is to boost current expenditure - that is their raison d'etre. But the short-term fiscal push comes from total expenditure, so it is a mistake to say that fiscal policy is contractionary.

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    3. Not really. The slowdwon in current consumption is also impressive. Anyway you do it, there has been a significant deceleration is public spending.

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  6. "The slowdwon in current consumption is also impressive."

    Impressive... slow down when current consumption grows faster than nominal GDP...

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  7. People walk about "hyperinflation" so casually that they look quite pathetic! I lived and worked in Greece during the 1980s and 90s and remember quite clearly that we were paying the banks more than 30% interest on our credit lines, as a business. Inflation was approximately around that figure but absolutely no one was talking about "hyperinflation", there was never any kind of panic and we had no breakdown in confidence to the state's monetary authorities.

    I'm not saying that the business environment was ideal. Far from it. But it's a little unnerving when people talk about the issue without having a clue. I've been there, in the trenches. I know. Stop the whining!..

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