The chart, made by economist Amilcar Collante, analyzes the impact on three variables of the economy of Argentina, after three devaluations in the past six years: in 2014, 2015, and 2018. He observed the behavior of the dollar, inflation, and wages. The work of the center of economic studies of the South (CESUR) Economist shows that following the crisis that began in April of 2018, the dollar rose more than 100 percent.
“The jump in the dollar generates an acceleration in the rate of inflation, which runs above the nominal wage and is blending the purchasing power,” explains Collante. “Why – add – post devaluation falls economic activity, consumption shrinks and the economy entering a recession”.
“What is technically called ‘pass-through’, which is the transfer of the devaluation to prices, is very high in Argentina.” Neighbouring countries manage to raise the exchange rate and inflation continues low (for example; Brazil, Chile, Colombia) “.” Then comes a period in which the exchange rate fall behind to anchor inflation expectations. And turns to later repeat the same sequence. “Argentina – concludes the CESUR economist – is repeating this behavior consistently”. In this note:
