Year: 2025 | Month: December | Volume: 12 | Issue: 12 | Pages: 708-717
DOI: https://doi.org/10.52403/ijrr.20251273
Growth Through Radical Fiscal Reform? Argentina's Chainsaw Policy as a Blueprint for Countries with Dysfunctional Budgets
Enrico Moch, PhD
Academic Director, Department of Economics, GrandEdu Research School, Germany,
Corresponding Author: Enrico Moch, PhD
ABSTRACT
This paper analyses Argentina’s fiscal policy transformation under President Javier Milei as a case of radical fiscal consolidation implemented under conditions of extreme macroeconomic instability and weak institutional credibility. Drawing on a contrastive single-case design, the study examines whether rapid and expenditure-based fiscal adjustment can coincide with short-term macroeconomic stabilisation and shifts in confidence-related expectations. Using validated data from international institutions, the analysis documents a simultaneous weakening of inflation dynamics, a marked reduction in the primary fiscal deficit, changes in investment-related indicators and declining sovereign risk premiums during the first year of reform implementation. While no causal attribution of individual policy measures is possible, the observed developments challenge the assumption that rapid fiscal consolidation necessarily entails short-term macroeconomic disruption. The paper situates these findings within the literature on fiscal credibility, executive self-commitment and expectation formation, arguing that under specific political and institutional conditions fiscal credibility may emerge not only through formal rules but also through consistent executive action and visible policy breaks. At the same time, the analysis emphasises the strong context dependence and limited transferability of such reform paths. Rather than presenting Argentina as a reform model, the paper conceptualises the Milei reform agenda as an analytical borderline case of fiscal self-correction. The contribution lies in differentiating potentially transferable elements of fiscal control from strictly context-specific conditions and in reframing fiscal consolidation as a credibility-driven control architecture rather than a purely quantitative adjustment of government spending.
Keywords: Fiscal Consolidation, Austerity and Growth, Argentina Economic Reform, Investment Confidence, State Retrenchment
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