Argentina’s latest attempt at economic stabilization follows a familiar script—fast disinflation, a strengthening peso, a sharp rebound, and an uncertain future. But can a fiscal anchor alone break the historical cycle and put the program on solid footing? Looking at the past might offer some clues. In this piece, we compare Argentina’s 2024 stabilization effort to previous ones and explore what that tells us about its chances of lasting success.
At first glance, Argentina’s 2024 stabilization looks like an early success—defying market expectations with fast disinflation and a stronger peso. Why did so many analysts get it wrong? One reason is the divergence between the actual stabilization program and the policies outlined during the presidential campaign, reflecting an information asymmetry between government and markets. Moreover, early skepticism about the viability of the administration’s shock therapy—particularly its ambitious fiscal consolidation—fueled concerns about a political and social backlash. Yet, as the government demonstrated fiscal discipline, public tolerance exceeded expectations, reinforcing the program’s credibility.
Argentina, like many Latin American economies, has been here before. The country attempted multiple exchange rate-based stabilization (ERBS) programs, many of which—as was often the case of ERBS elsewhere—successfully curbed inflation and triggered rapid, albeit temporary and ultimately failed, economic recoveries.
Will this time be different? While the answer remains uncertain, history offers valuable insights. A comparative analysis of key macroeconomic variables across past and present ERBS in Argentina helps identify critical similarities and differences, providing a longer-term perspective on the—increasingly debated—sustainability of the current program.
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