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).