Argentina and the contractionary effects of expansionary fiscal policy

The following posting appeared in RGE-Monitor (Latin America) on Nov. 18, 2008.

In an article published in The Journal of Macroeconomics[1] I show how information frictions could lead to asymmetric business cycles both in terms of magnitude and of the length of the return to trend. Negative shocks are amplified more than positive ones; also, negative shocks depict rapid contraction while the recovery is more protracted.