A Harvard professor admitted that he was wrong to predict a "brutal recession" with Milei

The economist and professor at Harvard University Rafael Di Tella publicly acknowledged that he was wrong in the forecasts he had made about the economic program of President Javier Milei. In statements to Radio Mitre and in an interview granted to La Nación, he admitted that he expected the strong fiscal adjustment to lead to a "massive recession", although the opposite ultimately occurred.

"All of us who predicted worse outcomes were brought to humility", Di Tella stated. "It is an economic program that is surprisingly doing well," he added, recognizing that the disinflation was much faster than he and much of the economic profession had anticipated.

The academic, who defines himself as being outside of mileísmo, explained that his error was due to underestimating the impact that the rapid correction of the fiscal imbalance would have. He argued that the Government managed to break the so-called "fiscal dominance" in just a few months, a situation in which the Treasury's needs permanently conditioned monetary policy and fueled inflation.

"We all believed that a very orthodox program, without heterodox measures to reduce inflationary inertia, would need a massive recession to reduce inflation, and that was not the case, quite the opposite", he pointed out. He also emphasized that the fiscal adjustment executed by Milei's administration was "surprising" both for its speed and its magnitude.

Di Tella also stated that the economic profession still needs to fully understand the effects produced by the rapid fiscal consolidation driven by the Government. "That gave them much larger dividends than we thought," he explained.

While he expressed differences with some positions of the ruling party, such as dollarization or the confrontational style of the President, he assured that he will continue to support the economic direction as long as no alternative emerges that guarantees fiscal discipline.

In that sense, he was particularly critical of Kirchnerism and part of the Argentine progressivism, which he accused of using "noble causes" to justify permanent fiscal deficits that then end up being financed with monetary issuance. "Argentine pseudoprogressivism clings to noble causes to produce very large fiscal deficits that they then monetize, defrauding the poorest", he stated.

The Harvard professor's statements had a wide impact on social media. Even the Minister of Economy, Luis "Toto" Caputo, highlighted his public acknowledgment and praised his "intellectual honesty" for admitting that the results of Javier Milei's economic program were very different from what he had predicted.