The 1987 Mexican Disinflation Program: An Exchange Rate-Based Stabilization?

52 Pages Posted: 15 Feb 2006

See all articles by Julio A. Santaella

Julio A. Santaella

Instituto Tecnológico Autónomo de México (ITAM)

Abraham Vela

affiliation not provided to SSRN

Date Written: March 1996

Abstract

We examine whether Mexico`s disinflation experience during 1987-94 fits a widely accepted set of stylized facts of exchange rate-based stabilization (ERBS), and relate it to theories put forward to account for the boom-recession business cycle associated with ERBS. A cursory look at Mexican data shows that the experience fits quite closely the theoretical predictions and the stylized facts of ERBS. However, the paper shows that there were some important differences and peculiarities of the Mexican case that deserve further study, especially regarding the role of the nominal anchor and the nature of the business cycle.

JEL Classification: E3, E52, E65

Suggested Citation

Santaella, Julio A. and Vela, Abraham, The 1987 Mexican Disinflation Program: An Exchange Rate-Based Stabilization? (March 1996). IMF Working Paper No. 96/24, Available at SSRN: https://ssrn.com/abstract=882924

Julio A. Santaella (Contact Author)

Instituto Tecnológico Autónomo de México (ITAM) ( email )

Rio Hondo No.1 Col. Tizapan-San Angel
del Centro de Economia Aplicada
01000 Mexico, D.F
Mexico
5628-4193 (Phone)
5628-4058 (Fax)

Abraham Vela

affiliation not provided to SSRN

No Address Available