This is an amusing story (HT: Tyler Cowen) from the Latin American (just when someone praised the region) country.
The private sector economists say actual inflation higher than published figure…
Argentina’s government has filed criminal charges against the managers of an economic consulting firm, escalating its persecution of independent economists. …The government is charging MyS Consultores with “publishing false information about inflation data” to benefit themselves and their clients. The criminal complaint alleges that MyS’s data also lead to speculative behavior in Argentina’s bond market.
…Consumer prices rose 9.7% in May from a year ago, according to the national statistics agency, Indec. But virtually all economists say annual inflation surpasses 20%—one of the world’s highest rates—angering government officials who dismiss inflation as a problem.
A friend from Argentina also told me the same thing of inflation higher than 20%. So an interesting case of published inflaiton vs actual inflation. And what a way to defend the published figures – just fine them.
So far this year, the Secretariat has fined at least nine economic research firms 500,000 pesos ($122,000) each. This week, the Secretariat also slapped a second fine on Orlando J Ferreres & Asociados.
“They fine us for saying how much prices have risen,” Mr. Ferreres, director of his eponymous firm, said. “They could seek criminal charges against all of us. We don’t know how far they’re willing to go.”
Mr. Ferreres said the legal actions are part of a strategy to prevent independent economists from publishing potentially negative information during an election year…
Government officials say they hoped the fines would deter economists from “deceiving” the public into making poor financial decisions by publishing inflation estimates that differ considerably from Indec’s consumer price index.
Economists fight back:
Economists point to unrestrained fiscal spending, a booming economy and an expanding money supply as the main drivers of inflation that is at least double that reported by Indec. They also say the government tacitly admits to high inflation every time it backs collective-bargaining agreements that include annual wage increases of 20% to 30%
Amusing but startling as well. Instead of clarifying the facts, government chooses to punish the economists.
In India (and I assume other developing economies), we always feel actual inflation is higher than the published one. But we have never really figured how high the actual inflation is. Argentina guys have figured that out and what a treatment for finding the truth…
But then as they say Truth always prevails.. This has been the experience with most economics things. Officials may hide actual inflation figures, overstate growth etc but it does face reality sometime later… Let’ s see what prevails in Argentina…
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