Is there light at the end of the tunnel? Macroeconomic adjustments: From equilibrium E to point H.

Abstract

This article analyzes the application in Argentina of the theory of automatic market adjustment, implemented in different forms but grounded in the same theoretical conception by successive governments over the past five decades. The analysis is framed within an epistemological debate concerning the foundations of the marginalist approach and the individualistic method of analysis upon which this theory is built, highlighting their limitations in explaining macroeconomic processes characterized by persistent disequilibria. We focus particularly on the final three years of the 1990s, a period that culminated in the collapse of the Convertibility regime. In this context, the government sought to maintain the nominal exchange rate through policies aimed at achieving competitive deflation, based on the assumption that the adjustment process would lead the economy toward an Equilibrium point (E), where markets would operate efficiently. However, the process resulted in a deep recession, high unemployment, and ultimately the collapse of the political regime: point H, referring to the Helicopter, a symbol of the abrupt end of a government that left office in December 2001, leaving behind economic and social devastation.