Daniel Gottlieb+ Your Authors @danielgott Econ Prof at London School of Economics. Previously @WUSTL, @Penn, @MIT. Behavioral Economist, Contract Theorist. May. 22, 2020 1 min read + Your Authors

7 years ago, I was almost kicked out of a McDonald's in Buenos Aires for taking a picture of their menu, posted at the end of the store. Unlike stores outside of Argentina, Big Macs weren't advertised. This was part of the government's manipulation of inflation indices. (1/4)

Since the Economist calculates inflation based on the prices of Big Macs over time, the government "convinced" McDonald's to keep the prices of Big Macs low to convey the idea that inflation was low. Why would the gov't want to manipulate inflation? (2/4)

Since a lot of their debt was indexed, a higher inflation rate increased the cost of the debt. Manipulating inflation allowed the govt to "default" on part of its debt without ever admitting it. (3/4)

Seven years later, then president Cristina Kirchner is now the VP, and threats about default are as relevant now as they were then. (4/4)


You can follow @danielgott.



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