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Mexico's Economy: the crisis, the recovery and the policy options


  • Julio López Gallardo

    () (UNAM)


The economic policies implemented in Mexico to confront the December 1994 crisis, even though instrumental in coping with the external deficit caused a strong recession coupled with falling real wages and a worsening in income distribution. These effects of the adjustment strategy stem from its contractionary impact on aggregate demand and supply. The recovery from the crisis was not the consequence of the strategy implemented, but rather of the evolution of the international economy as well as some modifications in the fiscal policy stance. An alternative economic strategy, based on subsidizing domestic production, would stimulate the recovery by promoting utilization of idle productive capacities, and moderate inflationary pressures. Besides that, selective fiscal and monetary policies must be implemented, and a mechanism to control capital flight has to be devised.

Suggested Citation

  • Julio López Gallardo, 2000. "Mexico's Economy: the crisis, the recovery and the policy options," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 1(2), pages 221-239, July-Dece.
  • Handle: RePEc:anp:econom:v:1:y:2000:i:2:p:221-239

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    More about this item


    Economic Adjustment; Economic Crisis; Economic Policy; Demand Management; Alternative Strategies;

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies


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