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Expectations, the business cycle and the Mexican peso crisis

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  • Moritz Cruz
  • Edmund Amann
  • Bernard Walters

Abstract

The 1994--95 'peso' crisis did not display characteristics which allow it to be easily captured by traditional crisis models. Models based on Minsky's financial fragility hypothesis offer more persuasive accounts but have been supported by relatively little direct empirical evidence. This paper provides such evidence, with particular attention being paid to the role of domestic financial liberalisation in the process. Minsky's hypotheses about the evolution of expectations over the business cycle are tracked using business survey data. In addition, crisis indicators are constructed, reflecting the changing vulnerability of the economy to shocks. The findings support a Minskyian interpretation of the crisis. Copyright 2006, Oxford University Press.

Suggested Citation

  • Moritz Cruz & Edmund Amann & Bernard Walters, 2006. "Expectations, the business cycle and the Mexican peso crisis," Cambridge Journal of Economics, Oxford University Press, vol. 30(5), pages 701-722, September.
  • Handle: RePEc:oup:cambje:v:30:y:2006:i:5:p:701-722
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    File URL: http://hdl.handle.net/10.1093/cje/bei103
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    Cited by:

    1. Moritz Cruz & Bernard Walters, 2008. "Is the accumulation of international reserves good for development?," Cambridge Journal of Economics, Oxford University Press, vol. 32(5), pages 665-681, September.
    2. John Harvey, 2010. "Neoliberalism, Neoclassicism and Economic Welfare," Journal of Economic Issues, Taylor & Francis Journals, vol. 44(2), pages 359-368.
    3. repec:eee:rujoec:v:1:y:2015:i:4:p:419-438 is not listed on IDEAS

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