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The Household Response to the Mexican Peso Crisis

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  • David J. McKenzie

Abstract

November 2001 Household expenditure surveys are used to examine the effects of the Mexican peso crisis on household consumption and employment. The crisis is seen to have caused income and consumption to decline for all groups of society, although the relative impact differed by the education, industry and residence of the household head. The main smoothing mechanism was a change in the composition of consumption. Households are shown to have increased their expenditure share on certain food items even more than Engel’s law would predict, reducing their expenditure on luxury goods in order to do so. Labour supply is not found to have responded strongly to the crisis. Working Papers Index

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  • David J. McKenzie, 2001. "The Household Response to the Mexican Peso Crisis," Working Papers 01017, Stanford University, Department of Economics.
  • Handle: RePEc:wop:stanec:01017
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    File URL: http://www-econ.stanford.edu/faculty/workp/swp01017.pdf
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    1. Verbeek, Marno & Nijman, Theo, 1992. "Can Cohort Data Be Treated as Genuine Panel Data?," Empirical Economics, Springer, vol. 17(1), pages 9-23.
    2. Orazio P. Attanasio & Miguel Székely, 1998. "Household Savings and Income Distribution in Mexico," Research Department Publications 4152, Inter-American Development Bank, Research Department.
    3. Martin Browning & Thomas Crossley, "undated". "Shocks, stocks and socks: consumption smoothing and the replacement of durables during an unemployment spell," Canadian International Labour Network Working Papers 27, McMaster University.
    4. Verbeek, Marno & Nijman, Theo, 1993. "Minimum MSE estimation of a regression model with fixed effects from a series of cross-sections," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 125-136, September.
    5. Lopez-Acevedo, Gladys & Salinas, Angel, 2000. "How Mexico's financial crisis affected income distribution," Policy Research Working Paper Series 2406, The World Bank.
    6. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    7. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    8. Frankenberg, E. & Thomas, D. & Beegle, K., 1999. "The Real Costs of Indonesia's Economic Crisis: Preliminary Findings from the Indonesia Family Life Surveys," Papers 99-04, RAND - Labor and Population Program.
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    Cited by:

    1. Jim Airola & Chinhui Juhn, 2008. "Wage Inequality in Post-Reform Mexico," Journal of Income Distribution, Journal of Income Distribution, vol. 17(1), pages 110-134, March.
    2. repec:ebl:ecbull:v:15:y:2002:i:1:p:1-7 is not listed on IDEAS
    3. Chiara Binelli, 2016. "Wage inequality and informality: evidence from Mexico," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-18, December.
    4. David J. McKenzie, 2006. "Disentangling Age, Cohort and Time Effects in the Additive Model," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(4), pages 473-495, August.
    5. David Mckenzie, 2002. "Are tortillas a Giffen Good in Mexico?," Economics Bulletin, AccessEcon, vol. 15(1), pages 1-7.

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