Stable disequilibrium

ARGENTINA - Report 28 Apr 2026 by Joaquin Cottani

I see Argentina's macroeconomy as trapped in a state of internal and external disequilibrium. On one hand, the output gap is negative, meaning that GDP is running below potential, On the other, the central bank is having trouble accumulating reserves at a high enough speed to convince international investors to lend to the federal government. Yet, despite these twin imbalances, nominal exchange rates (all four of them) are remarkably stable, and so are domestic interest rates. Economists are fond of imagining scenarios where unstable, as opposed to stable, equilibria exist. But can disequilibrium be stable?

To delve into this and other issues pertaining to the Argentinean economy, I wrote a semi-academic paper that anyone who has ever taken an intermediate course on open-economy macroeconomics can easily read, understand and, hopefully, enjoy. In this report, I provide a link to the paper and summarize it.

Now read on...

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