The Unforgiving ‘Market’ and the Tequilazo

Calvo, Guillermo

The Unforgiving ‘Market’ and the Tequilazo

Chapter 8 in Financial Reform in Developing Countries, 1998, pp 220-244 from Palgrave Macmillan

Abstract: Abstract Mexico’s financial débâcle and its impact on other emerging markets (the ‘Tequila effect’) has raised many fundamental questions. Mexico achieved fiscal balance in 1993, undertook several fundamental market-oriented reforms, signed a free trade agreement with a very large market (the NAFTA), became a member of the OECD, and was hailed by international institutions as a paramount example of successful reform. Yet the 1994 devaluation of 20 December brought the economy down like a house of cards. Output fell by more than 7 per cent in 1995, the current account deficit sharply swung from about 8 per cent of GDP in 1994 to zero and investors turned their noses away from high-yield Mexican public debt, even though the international community had pledged about $50 billion in a rescue package. In addition, Mexican problems quickly spread around the world’s emerging markets, including those exhibiting long and enviable track records.

Keywords: Exchange Rate; Central Bank; Current Account; Real Exchange Rate; Current Account Deficit (search for similar items in EconPapers)
Date: 1998
References: Add references at CitEc
Citations:

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

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-26871-9_8

Ordering information: This item can be ordered from
http://www.palgrave.com/9781349268719

DOI: 10.1007/978-1-349-26871-9_8

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla (sonal.shukla@springer.com) and Springer Nature Abstracting and Indexing (indexing@springernature.com).