scenario for a large increase in the CPI/PPI ratio that uses private sector CPI inflation estimates, consistent with adjustments made to the REER. This implies a cumulative 70% increase in the CPI/PPI ratio over 2008-2015, such that average annual CPI inflation is underestimated by 5% relative to PPI during the period (see Figure 3).

Figures for domestic output suffer from similar measurement discrepancies (see Figure 4).<sup>25</sup> Inflated official growth estimates would be reflected in monthly industrial production and annual GDP per capita differentials. We compute two alternative measures of output that adjust for this: (i) industrial production corrected for growth rates estimated by Orlando J. Ferreres & Asociados since 2007, and (ii) GDP per capita deflated by PriceStats CPI inflation starting in 2009, when the GDP deflator and PriceStats inflation began to diverge substantially. The latter measure implies GDP in 2014 was overstated by 26 percent.

Finally, an improved measure of productivity differentials is constructed using annual data following Ricci et al. (2008), measuring the ratio of real value added per worker in the agricultural sector vis-à-vis the nontradable sector in Argentina, relative to its main trade-weighted partners, excluding China.<sup>26</sup> We obtain data on value added and employment for 10-sectors from the Groningen Growth and Development Centre (GGDC) and classify sectors into tradables versus nontradables using three alternative definitions.<sup>27</sup> Figure 2: Prices - Official vs. Private Sector Estimates <!-- Start of picture text --> Annual CPI Inflation (%) Real GDP per capita: different deflators<br>Source: INDEC, PriceStats, and unionportodos.org Source: INDEC, PriceStats, and WEO (Constant 2005 prices)<br>80 PriceStats Congress CPI Official CPI 45000<br>CPI - INDEC CPI - PriceStats GDP deflator<br>70 40000<br>60 35000<br>50 30000<br>40 25000<br>30 20000<br>20 15000<br>10 10000<br>0 5000<br>-10 0<br>1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014<br><!-- End of picture text --> inflation has been systematically lower for CPI than PPI. Over the period 2008-15, CPI inflation was on average 3.3% lower than PPI inflation.

25 Elypsis, a private consulting firm, estimates its coincident index of economic activity (ICAE) grew by an accumulated 21% between 2007 and 2013, compared to 36% according to official figures for the monthly economic activity index (EMAE). Prior to 2007, the accumulated discrepancy between the ICAE and EMAE was merely 2%.

> 26 Including China in the productivity differential results in an insignificant coefficient.

27 The agricultural sector consists of Agriculture, hunting, forestry and fishing, and Mining and quarrying. The other tradables sector consists of: Manufacturing. The nontradables sector consists of: Electricity, gas and water supply, Construction, Wholesale and retail trade, hotels and restaurants, Transport, storage, and communication, Finance, insurance, real estate and business services, Government services, and Community, social and personal services. Results are robust to alternative classifications of nontradables that, for example, exclude: (i) Electricity, gas and water supply, and (ii) also Transport, storage, and communication. Data for Germany was obtained from the OECD. Missing data for years 2011-2014 were obtained from the OECD, the World Bank, and national sources.

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