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Argentina’s Inflation Paradoxes

The future of President Javier Milei’s new administration rests on its ability to deliver lower inflation and higher growth. The optimistic scenario is that inflation continues to fall, but not so abruptly that fiscal gains are undone; the pessimistic one is that an overvalued peso forces a sharp devaluation, pushing up prices.

LONDON – Why is inflation going down in Argentina? Because it went up massively late last year. Why might inflation rise again in Argentina? Because it has been falling in recent months. Those are the two main conclusions of a wonderful recent paper by two Uruguayan economists. (Want to figure out what is going on in a country or a household? Ask the neighbors.)