Principal components analysis for the evaluation of Argentina's economic performance: 1960-2020

Abstract

This article presents an exploratory analysis of the temporal heterogeneity of the economic performance of Argentina’s Economy for the period 1960-2020 based on annual frequency data. The objective is to propose three groups of performance -representing years of good, bad and very bad economic performance- and characterize them based on a wide set of variables. The methodology used is exploratory and is based on Principal Component Analysis (PCA), a technique that allows to summarize the information from a multivariate data set and characterizing the groups obtained from a small number. The results obtained show the main characteristics of each of the groups. The first of them, which represents the years of good economic performance, are economic growth, consumption of final goods and gross capital formation. Group two, which includes the years of deficient economic performance, does not present variables that characterize it, but the variables that characterize the first group are absent. Finally, the third group, the years of severe and disruptive economic crises, the variables that best represent it, are the abrupt growth rate of the debt/GDP ratio of the central government, the growth rate of domestic credit -both the private sector and the financial sector-, the growth rate of trade and the growth rate of exports.