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Corresponding Author:
Ramiro Alvarez, National Scientific and Technical Research Council (CONICET) and Center for Studies of Political Economy and Development (CEEPYD/UNM), National University of Moreno, Argentina

Florencia Médici, National Scientific and Technical Research Council (CONICET) and Institute of Studies in Science, Technology, Culture and Development (CITECDE), National University of Rio Negro, Argentina

An Alternative View on Inflation in Argentina in the Millennium: The Challenges of the Current Situation

Volume 77 - Latin American Economies : Complex Past and Challenging Future -Part I, February 2024
(pp. 117-150)
JEL classification: B51; E02; E31; E64; N16; O23
Keywords: Argentina; Distributive Conflict; Inflation; Exchange Rate; Political Stalemate


This article interprets Argentina’s recent inflation process following the Classical-Structuralist approach. In this theoretical framework, the price dynamic is understood as the result of conflict between wage increases and devaluations in a price-taker economy open to trade and financial flows.

We argue that inflationary processes in Argentina during the new century, especially in the last decade, can be explained by devaluations triggered by dynamics linked to the external sector, resulting from financial deregulation processes and inflows of external liabilities. In this scenario, conflict inflation manifests through a persistent exchange rate-wage spiral.

Thus, national currency devaluations raise profit margins and price levels in a society with strong labor unions, which react by claiming wage increases. High inflation regimes lead to changes in income distribution that are incompatible with habits, history, and labor institutions, resulting in intense distributive conflict under “pendulum” governments that reflect a situation of political stalemate. Moreover, the State’s capability to implement anti-inflationary policies based on an exchange rate anchor depends on the amount of the monetary authority’s foreign currency reserves. The ability to intervene in the foreign exchange market aims to deal with conflicting social groups and external pressures pushing to generate devaluation.

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Institute for International Economics
of the Genoa Chamber of Commerce

Istituto di Economia Internazionale
Camera di Commercio di Genova
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