Devaluations profoundly impact external competitiveness, purchasing power, and regional development. It seems intuitive that these effects are not uniform, and that sensitivity to changes in the exchange rate varies across the provinces of Argentina. These variations may be due to differences in productive structures, relience on foreign trade and local capacity to respond to exchange rate fluctuations. This paper empirically investigates the response of economic activity and regional exports to nominal enchange rate shcoks. Using vector error-correction models (VEC) and impulse-response functions, we observe significant provincial heterogeneities in Argentina, driven by the differenciated effects of exchange rate policy shocks. Among the 24 national jurisdictions analyzed, some provinces, including Buenos Aires and CABA, experience a positive and significant effect in the first year after the shock. In contrast, other provinces, particularly those with lower participation in national economic aggregates, exhiibit a negative and significant impact during the same period.
Autora: María Justina López
Director: Osvaldo Meloni
