IMF Working Papers

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

By Julio A. Santaella, Abraham Everardo Vela

March 1, 1996

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Format: Chicago

Julio A. Santaella, and Abraham Everardo Vela. The 1987 Mexican Disinflation Program: An Exchange-Rate-Based Stabilization?, (USA: International Monetary Fund, 1996) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Business cycles, Economic growth, Exchange rate arrangements, Exchange rates, Foreign exchange, Inflation, Monetary policy, Nominal anchors, Prices

Keywords: Business cycles, Chronic-inflation economy, Durable goods, Exchange rate arrangements, Exchange rate-based-stabilization, Exchange rates, Inflation, Inflation coefficient, Inflation inertia, Managed float, Nominal anchors, Price, Price level, Price shock, Relative-price variability, Resource allocation, Twelve-month rate of inflation, WP

Publication Details

  • Pages:

    52

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1996/024

  • Stock No:

    WPIEA0241996

  • ISBN:

    9781451844092

  • ISSN:

    1018-5941

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