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Meet the Producer: Exchange Rate Shocks, Media Salience, and the Legislative Importance of Economic Sectors in Argentina

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Abstract

In the last 15 years, considerable efforts have been directed towards understanding how currency shocks affect the clout of economic actors. Little research, however, has studied how currency shocks affect the salience of key economic actors and their organizations among the public. In this article, we test for the effect of currency shock on the media salience and legislative importance of economic actors. We use a novel empirical design that (1) measures the level of media salience of 23 Labor, Rural, Business, and Financial Associations and (2) measures the targets of legislation initiated in key Congressional committees. Results show that currency shocks have moderate effects on the media salience of economic actors and more pronounced policy consequences, reflected on the legislative importance of key economic jurisdictions in Congress.

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Notes

  1. There is little research that analyzes the effect of economic shocks on the economic issue salience of actors. For a notable exception see Culpepper (2011), which describes how differences in issue salience affect corporate governance in Europe and Japan.

  2. La Nación (published since 1870) and Clarín (published since 1945) are the two most important newspaper in Argentina. La Nación is considered a conservative newspaper, with close ties to the church, the military, and businesses, targeted to a relatively wealthier and more conservative constituency. Clarín has a less-defined political leaning, targeted to wider readership of middle classes and the urban poor.

  3. Galiani et al. (2003) provide an excellent overview of the Convertibility policies and the causes of its collapse in 2001.

  4. See Murillo (2005) and Murillo and Gallardo (2007) for an excellent analysis of the process of privatization, deregulation, and re-regulation of the utility service markets in Latin America.

  5. The rise in the price of commodities has transformed the relationship with China, which has become one of Argentina’s main trading partners.

  6. Affiliation matrices are symmetric matrices describing the number of ties of a subject i with all other individuals in a network.

  7. Nodes in economic networks represent the different individual agents, which in this study represent interest groups and key government agencies, and where links between the nodes represent their interactions. The socioeconomic perspective has emphasized understanding how the strategic behavior of the interacting agents is influenced by relatively simple network architectures (Schweitzer et al. 2009).

  8. Centrality is defined as the number of links incident upon a node (i.e. the number of ties that an interest group has).

  9. The Phoenix Group included a number of local economists who sponsored an abandonment of the pegged currency policy, more flexible monetary management, and a pro-industry economic strategy.

  10. The increase of commodity prices was strongly influenced by a robust Chinese demand, especially in the prices of soy and its byproducts (Song et al. 2006).

  11. The articles from the Economics section of La Nación provide more reliable data than dyads drawn from Clarín, since the economic news usually contain more relevant information about meetings, agreements, and exchanges among economic actors. Political news, by contrast, contains editorialized information and considerable more noise. While we consider La Nación to provide more reliable economic information, we also use all news from Clarín to assess the robustness of our findings.

  12. It is important to note that we include dyads up to December of 2007. Therefore, our analysis does not include (and is not affected), by the highly publicized conflict between agro-producers and the government in regards to the change in retenciones (tax fee) proposed by the Decree 125 in 2008–2009. Explaining the determinants of this conflict over this particular policy is beyond the scope of this paper. For an analysis of the agro-conflict in 2008 see Fairfield (2011).

  13. Today, soybeans have replaced beef and wheat as the country’s leading export (Richardson 2008).

  14. It is worth reminding readers that a dyad indicates that two actors are mentioned in the same article. We do not include information on how many times they are mentioned in the same article.

  15. Gains in network proximity are particularly pronounced for estimates from La Nación and more moderate for Clarín. Such results are to be expected, given that data from La Nación includes economic articles while news from Clarín includes also political articles which often editorialize events.

  16. Data to analyze the content of executive law initiatives is also available from the authors and posted in http://www.bsos.umd.edu/gvpt/calvo/.

  17. Roughly 50 % of the legislation reported from Committee is later approved on the plenary floor.

  18. Notice that legislation can be sent to multiple committees. Consequently, there is no “undercount” in the data. If a bill is relevant for industry and agriculture, the bill will be sent to both of them.

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Acknowledgments

A special debt of gratitude goes to Michael Wallerstein (✡), with whom Ernesto Calvo first discussed the issue of measuring exchange rate shocks and legislative attention. We would also like to thank Andy Baker, Ingo Feinerer, Rob Franzese, Jeffry Frieden, Nathan Jensen, Daniel Verdier, three anonymous reviewers, and the participants of the conference “Politics and the Global Recession” at Washington University, St. Louis, who kindly provided feedback for this project.

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Authors and Affiliations

  1. The Department of Government and Politics, University of Maryland, 3140 Tydings Hall, College Park, MD, 20742, USA

    Ernesto Calvo

  2. Political Studies, Centro de Investigación y Docencia Económicas (CIDE), Circuito Tecnopolo Norte s/n. Col. Hacienda Nueva CP 20313, Aguascalientes, Mexico

    Aldo F. Ponce

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  1. Ernesto Calvo
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  2. Aldo F. Ponce
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Correspondence to Ernesto Calvo.

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Calvo, E., Ponce, A.F. Meet the Producer: Exchange Rate Shocks, Media Salience, and the Legislative Importance of Economic Sectors in Argentina. St Comp Int Dev 48, 331–355 (2013). https://doi.org/10.1007/s12116-013-9131-1

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