The Mexican Peso Crisis? How Much Did We Know? When Did We Know It?
The Mexican crisis of 1994 raised throughout the world a number of questions about the sustainability -- and even the merits -- of the market oriented reform process in Latin America and other regions. Understanding how events unfolded in Mexico during the early 1990s continues to be fundamentally important to assess the mechanics of currency crises. More importantly, perhaps, the eruption of the East Asian currency crises in the summer and fall 1997 has raised the question of whether the lessons from Mexico have indeed been learned by policy makers, private sector analysts and international civil servants. More specifically, as a result of the recent events in South East Asia many observers have argued that the international financial organizations -- the IMF and the World Bank -- and the governments of the advanced countries have failed to revamp the early warning system that was supposed to prevent a repetition of a Mexico-style crisis. This paper analyzes the causes behind the Mexican crisis, emphasizing the role of capital inflows, inflationary inertia and real exchange rate overvaluation. I also ask a number of questions regarding the predictability of the crisis: Should Wall Street analysts have known that things were getting out of hand? And if they did, why didn't they alert their clients? And, how much did officials at the US Treasury know about the depth of the Mexican problems? And, what was the role of the media? I conclude that although the US Treasury was fully aware of what was going on, most private sector analysts were unaware of the seriousness of the situation.
|Date of creation:||Dec 1997|
|Date of revision:|
|Publication status:||published as Sebastian Edwards, 1998. "The Mexican Peso Crisis: How Much Did We Know? When Did We Know It?," The World Economy, Blackwell Publishing, vol. 21(1), pages 1-30, 01.|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jeffrey Frankel & Miles Kahler, 1993. "Regionalism and Rivalry: Japan and the United States in Pacific Asia," NBER Books, National Bureau of Economic Research, Inc, number fran93-1.
- Sachs, Jeffrey & Tornell, Aaron & Velasco, Andres, 1995.
"The Collapse of the Mexican Peso: What Have We Learned?,"
95-22, C.V. Starr Center for Applied Economics, New York University.
- Jeffrey Sachs & Aaron Tornell & Andres Velasco, 1995. "The Collapse of the Mexican Peso: What Have We Learned?," Harvard Institute of Economic Research Working Papers 1724, Harvard - Institute of Economic Research.
- Jeffrey Sachs & Aaron Tornell & Andres Velasco, 1995. "The Collapse of the Mexican Peso: What Have We Learned?," NBER Working Papers 5142, National Bureau of Economic Research, Inc.
- Calvo, Guillermo A. & Mendoza, Enrique G., 1996.
"Mexico's balance-of-payments crisis: a chronicle of a death foretold,"
Journal of International Economics,
Elsevier, vol. 41(3-4), pages 235-264, November.
- Guillermo A. Calvo & Enrique G. Mendoza, 1996. "Mexico's balance-of-payments crisis: a chronicle of death foretold," International Finance Discussion Papers 545, Board of Governors of the Federal Reserve System (U.S.).
- Sebastian Edwards, 1989.
"Structural Adjustment Policies in Highly Indebted Countries,"
in: Developing Country Debt and Economic Performance, Volume 1: The International Financial System, pages 159-208
National Bureau of Economic Research, Inc.
- Sebastian Edwards, 1989. "Structural Adjustment Policies in Highly Indebted Countries," NBER Chapters, in: Developing Country Debt and the World Economy, pages 249-262 National Bureau of Economic Research, Inc.
- Sebastian Edwards, 1987. "Structural Adjustment Policies in Highly Indebted Countries," UCLA Economics Working Papers 453, UCLA Department of Economics.
- Sebastian Edwards, 1988. "Structural Adjustment Policies in Highly Indebted Countries," NBER Working Papers 2502, National Bureau of Economic Research, Inc.
- Rudger Dornbusch & Ilan Goldfajn & Rodrigo O. Valdés, 1995. "Currency Crises and Collapses," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(2), pages 219-294.
- Helmut Reisen, 1995. "Managing Temporary Capital Inflows: Lessons from Asia and Latin America," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 34(4), pages 395-427.
- Rudiger Dornbusch & Alejandro Werner, 1994. "Mexico: Stabilization, Reform, and No Growth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 253-316.
- Guillermo A. Calvo & Enrique G. Mendoza, 1997.
"Rational herd behavior and the globalization of securities markets,"
Discussion Paper / Institute for Empirical Macroeconomics
120, Federal Reserve Bank of Minneapolis.
- Calvo, Guillermo A. & Mendoza, Enrique, 1997. "Rational Herd Behavior and the Globalization of Securities Markets," Working Papers 97-26, Duke University, Department of Economics.
- Robert P. Flood & Peter Isard, 1988. "Monetary Policy Strategies," NBER Working Papers 2770, National Bureau of Economic Research, Inc.
- Guillermo A. Calvo, 1995.
"Varieties of Capital-Market Crises,"
Research Department Publications
4008, Inter-American Development Bank, Research Department.
- Jeffrey A. Frankel, 1993. "On Exchange Rates," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061546, June.
- Edwards, Sebastian & Edwards, Alejandra Cox, 1991. "Monetarism and Liberalization," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226184890.
- Oks, Daniel & van Wijnbergen, Sweder, 1994.
"Mexico after the debt crisis : is growth sustainable?,"
Policy Research Working Paper Series
1378, The World Bank.
- Oks, Daniel & van Wijnbergen, Sweder, 1995. "Mexico after the debt crisis: is growth sustainable?," Journal of Development Economics, Elsevier, vol. 47(1), pages 155-178, June.
- McKinnon, Ronald I., 1982. "The order of economic liberalization: Lessons from Chile and Argentina," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 17(1), pages 159-186, January.
- Claudio M. Loser & Eliot Kalter, 1992. "Mexico: The Strategy to Achieve Sustained Economic Growth," IMF Occasional Papers 99, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:6334. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.