January 31, 2013
Argentina's Dangerous Economic Stupidity
Joseph Kadane, Los Angeles Times
In 2007, the government of Argentina fired Graciela Bevacqua and other statisticians who were collecting its price statistics and inflation estimates. Since that time, large and disturbing — even shocking — discrepancies have developed between the official inflation estimates (roughly 10% a year) and privately generated estimates announced by Bevacqua and others (roughly 25% a year).
Why would the Argentine government take such drastic action?
In late 2001, Argentina defaulted on its bonds, and it has refused to negotiate with its creditors. This has cut off the third-largest economy in Latin America from the international capital markets. To finance itself, the government has taken to seizing or nationalizing assets (national pension...