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The mexican financial crisis of December 1994 and lessons to be learned

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  • L. Klein
  • Alfredo Coutiño

Abstract

When the Mexican financial crisis occurred in December, 1994, there was little information with which to analyze the prospects, but there were many similarities between the adjustment that Mexico went through in connection with the debt crisis of 1982–83. The time paths of crucial variables in the two situations, 1994–95 and 1982–83, has been studied in order to gain some insight, allowing, of course, for special circumstances that were important on each occasion. We estimated export and import equations from monthly data, 1982–83, and used these equations, together with the rest of the CIEMEX model, to make extrapolations for the period after December 1994. A main finding is that the earlier crisis required a two-year adjustment, but current circumstances lead the full model to extrapolate a milder contraction and faster (one year) recovery. These calculations have been useful in interpreting some of the noneconometric aspects of Mexico's adjustment after 1994, as well as some of the circumstances that precipitated the crisis in the first place. Copyright Kluwer Academic Publishers 1996

Suggested Citation

  • L. Klein & Alfredo Coutiño, 1996. "The mexican financial crisis of December 1994 and lessons to be learned," Open Economies Review, Springer, vol. 7(1), pages 501-510, March.
  • Handle: RePEc:kap:openec:v:7:y:1996:i:1:p:501-510 DOI: 10.1007/BF01886210
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    References listed on IDEAS

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    1. Edin, Per-Anders & Vredin, Anders, 1993. "Devaluation Risk in Target Zones: Evidence from the Nordic Countries," Economic Journal, Royal Economic Society, vol. 103(416), pages 161-175, January.
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    4. Shleifer, Andrei & Vishny, Robert W, 1997. " The Limits of Arbitrage," Journal of Finance, American Finance Association, vol. 52(1), pages 35-55, March.
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    6. Blanco, Herminio & Garber, Peter M, 1986. "Recurrent Devaluation and Speculative Attacks on the Mexican Peso," Journal of Political Economy, University of Chicago Press, vol. 94(1), pages 148-166, February.
    7. Goldberg, Linda S., 1994. "Predicting exchange rate crises : Mexico revisited," Journal of International Economics, Elsevier, pages 413-430.
    8. Flood, Robert P. & Garber, Peter M., 1984. "Collapsing exchange-rate regimes : Some linear examples," Journal of International Economics, Elsevier, pages 1-13.
    9. Blackburn, Keith & Sola, Martin, 1993. " Speculative Currency Attacks and Balance of Payments Crises," Journal of Economic Surveys, Wiley Blackwell, vol. 7(2), pages 119-144, June.
    10. Sachs, Jeffrey & Tornell, Aaron & Velasco, Andres, 1995. "The Collapse of the Mexican Peso: What Have We Learned?," Working Papers 95-22, C.V. Starr Center for Applied Economics, New York University.
    11. Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, January.
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    Cited by:

    1. Coutiño, Alfredo, 2015. "Acerca del poder predictivo de Klein/On the Predictive Power of Klein," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 33, pages 385-392, Mayo.

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