The Consumer Response to the Mexican Peso Crisis

David Mckenzie ()

Economic Development and Cultural Change, 2006, vol. 55, issue 1, pages 139-72

Abstract: Household expenditure surveys are used to examine the effects of the Mexican peso crisis on household consumption. The main smoothing mechanism was a change in the composition of consumption, with households reducing semidurable spending to maintain basic food levels. This article provides a method for disentangling income, price, demographic, and crisis adjustment effects and finds that households increased their expenditure share on certain basic food items even more than Engel's law and relative price changes would predict. I hypothesize that this reflects the use of semidurables as an adjustment mechanism and show that this leads to changes in the shape and position of the Engel curves. However, the article cannot fully rule out the alternative explanation that the reduction in semidurables reflects households reducing semidurable stocks due to a perceived fall in permanent income from the crisis.

Date: 2006
View citations in EconPapers

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: The Consumer Response to the Mexican Peso Crisis (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Ordering information: This journal article can be ordered from
http://www.journals.uchicago.edu/EDCC/order1.html

Access Statistics for this article

Economic Development and Cultural Change is edited by John Strauss

More articles in Economic Development and Cultural Change from University of Chicago Press
Address: The University of Chicago Press, Journals Division, P.O. Box 37005 Chicago, IL 60637
Series data maintained by Christopher F. Baum ().