Nicolás Cachanosky Studies the Human Cost of Bad Policy

The Big Picture

Growing up in Argentina, Nicolás Cachanosky learned what inflation meant long before he studied it as an economist.

His earliest memories go back to the 1980s and early 1990s, when his father would buy as many groceries as possible immediately after payday. Holding on to the family's pesos meant watching their purchasing power disappear.

“He needed to spend those pesos before they lost value,” Cachanosky said. “Inflation was so high that on some days, prices had risen by the time you walked out of the store.”

Today, Cachanosky is an associate professor of economics and director of the Center for Free Enterprise at UTEP's Woody L. Hunt College of Business. His research examines many of the same forces he watched shape everyday life in Argentina: inflation, monetary institutions, dollarization, and populism.

For Cachanosky, those questions became especially urgent after Argentina's 2001 economic crisis.

Nicolás Cachanosky's research on inflation, dollarization, and populism is rooted in experiences growing up in Argentina.

The through line

Experience became the research question.

Inflation first appeared as a fact of everyday life. Argentina's 2001 crisis turned that experience into a larger question about policy, institutions, and trust.

1980s – Early 1990s

Living with inflation

Payday meant spending pesos quickly before rising prices reduced what the family's income could buy.

1990s

A period of stability

Relative stability, growth, and greater economic openness showed Cachanosky that Argentina's instability was not inevitable.

2001

Crisis changes the question

Families lost savings and economic security, pushing Cachanosky to think more deeply about institutions and monetary trust.

Research today

Dollarization and populism

His work examines whether monetary institutions can protect people from instability that outlasts individual governments.

When Stability Breaks

Cachanosky remembers the 1990s as a period of relative stability, economic growth, and greater openness in Argentina. The crisis that followed changed his understanding of the country and ultimately helped define his research.

The experience left him with a question that has followed him throughout his career: How can the interests of individuals and political leaders become so disconnected in a democracy?

His research on monetary institutions grew partly from that question. Cachanosky argues that lasting price stability requires a monetary system people can trust regardless of who holds political power. That led him to study dollarization, in which a country adopts a foreign currency in place of its own.

Countries including Panama, Ecuador, and El Salvador have adopted the U.S. dollar under different circumstances. For Cachanosky, the technical questions surrounding those systems connect to a much more immediate concern: protecting people from instability capable of erasing savings and disrupting ordinary economic life.

“I saw families destroyed, years of savings vanish, and hope disappear — all from wrongheaded policy.”
Nicolás Cachanosky on Argentina's 2001 crisis

From research to a national debate

Dollarization moved from an academic question into Argentine politics.

In 2021, Cachanosky and economist Emilio Ocampo began writing a book examining how Argentina could responsibly dollarize its economy.

Then the subject moved quickly from academic research into national politics. During Argentina's presidential campaign, candidate Javier Milei announced on live television that his dollarization proposal was based on the work by Cachanosky and Ocampo. Their research was suddenly part of a national debate about the future of Argentina's monetary system.

“Unexpected, and a rollercoaster,” Cachanosky said.

The timing made the period even more memorable. His daughter was born as the debate accelerated, and he was preparing for a move to El Paso.

“It felt like having three jobs at once.”

Watch: Nicolás Cachanosky presents “A Case for Argentina's Dollarization: Why and How to Implement It” as part of the Hayek Memorial Lecture.

The border view

El Paso puts different systems side by side.

Living in El Paso has given Cachanosky another perspective on the institutions and political boundaries that shape economic life.

National borders may define different political and economic systems, but they do not necessarily reflect how people experience a connected region. For Cachanosky, interacting with Juárez is — or should be — every bit as natural as interacting with Las Cruces or Lubbock.

That proximity makes questions about institutions, economic opportunity, and national systems tangible in a different way. In the Paso del Norte region, those systems exist alongside one another every day.

“My phone sometimes thinks I'm roaming from Mexico when I'm on campus.”
Nicolás Cachanosky

Teaching It His Way

Cachanosky's father eventually influenced another part of his career.

Also an economics professor, his father encouraged fellow faculty members to write down their own lessons rather than rely entirely on textbooks. Cachanosky carried that advice into his own classroom.

He now develops open-access reading companions for his courses, allowing him to organize economic concepts around the way he teaches while eliminating the cost of a traditional textbook for his students.

“When I build my own course material, I get to teach it my way — and it saves students the cost of an expensive textbook,” Cachanosky said.

The approach also reflects what he wants students to take from economics. Understanding how today's monetary institutions work is only the beginning. He wants students to question why those systems developed, consider where they might be headed, and recognize the consequences economic policy can have far beyond financial markets.

What's Next

Much of Cachanosky's recent research has followed two tracks: dollarization and populism. His current work brings them together.

He is examining whether dollarization can help insulate an economy from some of the costs associated with populist governments by placing monetary policy beyond the control of individual political leaders.

It is a contemporary research question rooted in experiences Cachanosky has been thinking about since Argentina's 2001 crisis.

Can dollarization help protect a country from the economic costs of populism?

“I want [students] to grasp how much economic policy shapes people's lives,” Cachanosky said. “I saw that firsthand in Argentina in 2001, and I hope no one has to see it again.”

Go Deeper

Argentina, institutions, and economic policy

Hear Cachanosky discuss Argentina's economic experience and the institutional questions behind his research.

Watch: Nicolás Cachanosky discusses Argentina as part of the FMI Public Speaker Series.

Explore Cachanosky's research → Visit the Center for Free Enterprise →