IESET.
Hypotheses·fiscal·milei_chainsaw_state_capacity_decomposition_2024_2025

Milei's "motosierra" (chainsaw) programme combines public-sector employment cuts, ministry consolidation (from 18 to 9 ministries), and elimination of energy/transport subsidies.

The pre-registered claim is that the state-shrinkage produces a measurable contraction in general-government expenditure as a share of GDP (>5 pp decline 2023→2025) AND that GDP recovery occurs by 2025Q4 (i.e., the state-shrinkage does not produce a permanent output decline). The competing prediction is that aggressive state contraction produces a Greek-style permanent-output-loss outcome (output recovery to 2023 level fails by 2026Q4). The hypothesis decomposes the fiscal correction into spending-side vs revenue-side channels to test whether the correction is genuinely structural (spending cuts) or transitory (inflation-tax revenue + asset-sale one-offs).

PARTIALengine/runs/milei_chainsaw_state_capacity_decomposition_2024_2025

PARTIAL — mean_gap=-1.239, |gap|/pre_sd=0.22, p_perm=0.5; claim direction ambiguous

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

In ordinary language

In plain terms, this asks whether milei chainsaw indicator is actually linked to better or worse general government expenditure pct income from 2008 to 2026.

plain answer

The evidence is suggestive but not decisive. mean_gap=-1.239, |gap|/pre_sd=0.22, p_perm=0.5; claim direction ambiguous

why it matters

This matters because fiscal claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 6 country or place units from 2008 to 2026, using a synthetic control design.

what was measured
What changed
  • Milei chainsaw indicator
Possible pathway
  • Spending cut share of correction
  • Subsidy elimination share of correction
What we checked
  • General government expenditure pct income
  • Public sector employment share
  • Real income quarterly
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/milei_chainsaw_state_capacity_decomposition_2024_2025
1007550250200820172026ARGGRCIRLLVAESPPRT
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show general_government_expenditure_pct_gdp across 6 sampled countries over 2008–2026.
The shapes above are stylised — none of the lines are real data.
Placeholder for milei_chainsaw_state_capacity_decomposition_2024_2025. Published chart will be generated from engine/runs/milei_chainsaw_state_capacity_decomposition_2024_2025/chart_data.json.

Pre-registration

pre-registered
first-spec commit 098ce96 · 2026-04-30T12:57:33Z
run generated · 2026-04-30T10:15:31Z

Milei's "motosierra" (chainsaw) programme combines public-sector employment cuts, ministry consolidation (from 18 to 9 ministries), and elimination of energy/transport subsidies. The pre-registered claim is that the state-shrinkage produces a measurable contraction in general-government expenditure as a share of GDP (>5 pp decline 2023→2025) AND that GDP recovery occurs by 2025Q4 (i.e., the state-shrinkage does not produce a permanent output decline). The competing prediction is that aggressive state contraction produces a Greek-style permanent-output-loss outcome (output recovery to 2023 level fails by 2026Q4). The hypothesis decomposes the fiscal correction into spending-side vs revenue-side channels to test whether the correction is genuinely structural (spending cuts) or transitory (inflation-tax revenue + asset-sale one-offs).

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Refuted if any of: (a) general-government-expenditure share does not fall by at least 5 pp of GDP from 2023 to 2025, OR (b) real GDP at 2025Q4 remains below 2023Q3 level (permanent output loss), OR (c) the channel decomposition shows that less than 40% of the fiscal correction is real-spending cuts (i.e., the correction is dominated by inflation-tax or one-off asset-sale revenues), OR (d) the synthetic-DiD CATT on real GDP through 2025 is significantly negative versus the austerity-comparator donor pool at the Greek 2010-2015 output-cost depth (peak-to-trough decline > 8%).

formal test & threshold
test:      synthetic_control_plus_fiscal_channel_decomposition
threshold: spending_share_decline >= 5pp AND real_gdp_2025Q4 >= real_gdp_2023Q3 AND real_spending_cut_share >= 0.40

Method

Template
synthetic_control
Clustering
country
Sample
6 countries · 2008 – 2026
Evidence type
causal

Primary: synthetic control with ARG as treated unit and Greece/Ireland/Latvia/Spain/Portugal as donor pool, matched on pre-treatment government-expenditure share and inflation level. Secondary: panel_fe with austerity-window indicator. Tertiary: channel decomposition regressing fiscal-correction outcome on real-spending-cut share, subsidy-elimination share, and inflation-tax share to test which channel dominates.

Data

VariableSourceTransform
general_government_expenditure_pct_gdp
outcome
world_bank_wdi:GC.XPN.TOTL.GD.ZStier 2
annual_pct_gdp
public_sector_employment_share
outcome
ilostat:EAP_2WAP_SEX_AGE_RT_Atier 2
indec:eph_publicotier 2
pct_of_total_employment
real_gdp_quarterly
outcome
indec:emaetier 2
log_level_quarterly
subsidies_pct_gdp
outcome
imf:GGXCNL_NGDPtier 2
indec:subsidios_economicostier 2
annual_pct_gdp
milei_chainsaw_indicator
treatment
constructed:binary = 1 for ARG from 2023-12-10 onwardtier 5
binary
spending_cut_share_of_correction
channel
derived: real spending cuts / (real spending cuts + revenue gain + inflation erosion of nominal liabilities)ratio
subsidy_elimination_share_of_correction
channel
derived: change in subsidies_pct_gdp / total fiscal-balance improvementratio
commodity_terms_of_trade
control
world_bank_wdi:TT.PRI.MRCH.XD.WDtier 2
log_change
us_policy_rate
control
fred:FEDFUNDStier 1
level
pre_treatment_govt_size
control
world_bank_wdi:GC.XPN.TOTL.GD.ZStier 2
pre_treatment_average

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — milei_chainsaw_state_capacity_decomposition_2024_2025

Verdict: PARTIAL — mean_gap=-1.239, |gap|/pre_sd=0.22, p_perm=0.5; claim direction ambiguous

Pre-registration

  • Claim: Milei's "motosierra" (chainsaw) programme combines public-sector employment cuts, ministry consolidation (from 18 to 9 ministries), and elimination of energy/transport subsidies. The pre-registered claim is that the state-shrinkage produces a measurable contraction in general-government expenditure as a share of GDP (>5 pp decline 2023→2025) AND that GDP recovery occurs by 2025Q4 (i.e., the state-shrinkage does not produce a permanent output decline). The competing prediction is that aggressive state contraction produces a Greek-style permanent-output-loss outcome (output recovery to 2023 level fails by 2026Q4). The hypothesis decomposes the fiscal correction into spending-side vs revenue-side channels to test whether the correction is genuinely structural (spending cuts) or transitory (inflation-tax revenue + asset-sale one-offs).
  • Falsification rule: Refuted if any of: (a) general-government-expenditure share does not fall by at least 5 pp of GDP from 2023 to 2025, OR (b) real GDP at 2025Q4 remains below 2023Q3 level (permanent output loss), OR (c) the channel decomposition shows that less than 40% of the fiscal correction is real-spending cuts (i.e., the correction is dominated by inflation-tax or one-off asset-sale revenues), OR (d) the synthetic-DiD CATT on real GDP through 2025 is significantly negative versus the austerity-comparator donor pool at the Greek 2010-2015 output-cost depth (peak-to-trough decline > 8%).

Synthetic-control estimate

  • shape: synth_did
  • treated_country: ARG
  • event_year: 2023
  • n_donors: 5
  • donor_weights (top): {'ESP': 0.5848, 'PRT': 0.3279, 'LVA': 0.0873, 'GRC': 0.0, 'IRL': 0.0}
  • pre_rmse: 4.231345172229211
  • pre_period_sd: 5.683895377878333
  • mean_post_gap: -1.2387651070520636
  • end_period_gap: 1.4568593083496082
  • post_period_years: [2023, 2026]
  • placebo_p_value: 0.5
  • n_placebos: 5
  • method: synthetic-control via NNLS, permutation inference

Variables resolved

  • imf:NGDP_R; indec:emae → real_gdp_quarterly (outcome, n=10914)
  • imf:GGXCNL_NGDP; indec:subsidios_economicos → subsidies_pct_gdp (outcome, n=8848)

Generated by scripts/run_synth_did.py at 2026-04-30T10:15:31+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

This complements milei_dollarisation_inflation_collapse_2024_2026 but tests a distinct outcome family: state-capacity decomposition rather than nominal-stabilisation success. The fiscal-correction channel decomposition is the load-bearing test — a correction achieved primarily via inflation-eroding nominal liabilities is different from one achieved via real-spending cuts. Comparison to historical austerity episodes (Greece 2010-2015, Ireland 2010-2013, Latvia 2009-2010) provides context for the spending-cut-to-output-cost ratio.

Authored framework. Read the transparency note.