Argentina's lost decade and subsequent recovery: hits and misses of the neoclassical growth model

Abstract

We examine the economic depression that Argentina suffered in the 1980s, as well as the subsequent recovery, from the perspective of growth theory, taking total factor productivity as exogenous. The predictions of the neoclassical growth model conform rather well with the evidence for the "lost decade" depression and at the same time point to a puzzle: Investment did not recover in the subsequent decade of the 1990s nearly as fast as it should have according to that same model.Depressions