Beware! The Fast Track to Inflation Starting from Zero is Full of Nonsense
The article discusses the challenges and time required for countries to achieve low inflation rates and highlights the importance of political stability in economic programs.
The article addresses the complexity and duration of achieving low inflation rates in countries, citing findings from Harvard economist Carmen Reinhart who noted that 60% of countries take over 7 years to reach single-digit inflation, while 40% take more than 10 years. This indicates that disinflation processes are often protracted and fraught with challenges.
Further, it references a study by Argentine economists Martín Rapetti, Joaquín Waldman, and Gabriel Palazzo which aligns with Reinhart's assertions. The discourse shifts to the specific situation in Chile as examined by economist Sebastián Edwards. His analysis points out that economic reforms often exemplify a trial-and-error approach and are deeply affected by partisan politics, especially in nations with a long history of inflation.
In Chile’s context, political consistency played a key role in the success of reforms initiated during the dictatorship of Pinochet, supported by the left despite the high levels of inflation at that time. The article implies that without a commitment to continuous economic stabilization and political coherence, efforts to curb inflation in any country may face significant hurdles.