Argentina: The Honor Student

On January 7, 2025, Argentina’s EMBI spread plunged drastically. J.P. Morgan later revealed that the decline was due to a technical error, creating a rare natural experiment—an exogenous shift in sovereign risk pricing. Because this error was neither anticipated nor related to the country’s fundamentals, this natural experiment offers a unique opportunity to isolate the “information effect,” which the literature identifies as important to understanding episodes with severe macrofinancial consequences in emerging market economies (EMEs). Using a Difference-in-Differences model and high-frequency -intraday- stock market data, we find that Argentine stocks outperformed those of other EMEs during the error window, indicating that investors revised their beliefs about financial asset values based on mispriced signals—consistent with the information effect. Stocks linked to the oil and shale reserve of Vaca Muerta rose more sharply, suggesting that investors interpreted the EMBI drop as an improvement likely to facilitate investment in the region. These results underscore the importance of clear and timely communication in emerging markets to prevent second-order effects that, despite solid fundamentals, can create herding behavior and financial instability.

Doctor en economía por la Universidad de California, San Diego, y actualmente se desempeña como director de Análisis de Riegos Macrofinancieros del Banco Central de México.

Doctor en Economía, University of California at Berkeley. Director de la Licenciatura en Artes Liberales y Ciencias, un bachillerato universitario (BA). Fue presidente de la Asociación Argentina de Economía Política y editor en jefe del Journal of Applied Economics. Publicó en Ensayos Económicos, Económica, Journal of Development Economics, Estudios de Economía, Journal of International Economics, Journal of Public Economic Theory, Public Choice, Kyklos, Economics & Politics, Economía LACEA Journal y History of Economic Ideas, entre otras revistas académicas. Trabaja en un libro sobre el BA para flexibilizar la educación universitaria en Iberoamérica. Ciclista urbano y corredor.