Monetary Aggregates, International Reserves and Inflation Dynamics in Argentina
Monetary Aggregates, International Reserves and Inflation Dynamics in Argentina Evidence from a Reserve-Backing Model (September 2025) Jorge A. García Pasquinelli Independent Macroeconomic Consultant Buenos Aires, Argentina Abstract This paper analyzes inflation dynamics in Argentina using a monetary-reserve backing framework that links monetary aggregates (M1, M2, M3) with international reserves held by the Central Bank. Using data for September 2025, the study derives implicit exchange rates associated with different levels of monetary liquidity and compares them with observed financial exchange rates. The results indicate a persistent misalignment between broad money expansion and reserve accumulation, which explains both observed inflation and latent nominal pressures. Scenario-based projections at three- and six-month horizons reinforce the conclusion that, without a change in monetary or external conditions, inflationary pressures are likely to persist. Keywords: Inflation, Mon...