Article

Les Liaisons dangereuses: a Minskyan approach to the relation of credit and investment in Argentina during the 1990s

Cambridge Journal of Economics (Impact Factor: 0.95). 01/2008; 32(5):739-759. DOI: 10.1093/cje/ben007
Source: RePEc

ABSTRACT We classify firms according to their financial behaviour in the short term using a Minskyan taxonomy that classifies firms as Hedge, Speculative and Ponzi. We measure financial constraints across that taxonomy using panel-data for Argentina during 1992--2001. After controlling for profitability we find that firms with an oppressed financial structure in the short term had to rely on their internal funds for long-term investment. We interpret this finding from a Minskyan/Keynesian framework arguing that credit allocation followed conventional rules about the quality of borrowers and not necessarily about the quality of the project. Because of being a highly unstable country, Argentinean firms' quality is defined on a short-term basis. Copyright The Author 2008. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.

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