Private savings and financial modernization in Mexico, 1988-95

Julio Lopez G. and Armando Sanchez V.
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Julio Lopez G.: Universidad Nacional Autonoma de Mexico, Faculty of Economics, Mexico, D.F. (Mexico)
Armando Sanchez V.: Universidad Nacional Autonoma de Mexico, Faculty of Economics, Mexico, D.F. (Mexico)

BNL Quarterly Review, 2000, vol. 53, issue 214, 317-339

Abstract: The evolution of private savings has attracted a lot of attention in the controversy about the origins of Mexico's 1995 crisis. In this paper the authors analyze the evolution of private savings in Mexico using the theory of effective demand as a framework and making use of econometric estimates. In this context, they analyze the impact of the financial reforms, and in particular the effect of liberalization and deregulation of the financial system on private savings in Mexico from 1980 to 1995. The authors formulate an explanation of the determinants of private savingsand the impact of the strategy of "financial modernization" on private savings, by specifying a model that allows to identify the influence of monetary and credit policies on savings. Then they carry out econometric estimates that lend empirical support to the main conclusions of the theoretical analysis. Their econometric work confirm notably that private savings has been low due to a series of changes in monetary policy that favored the contraction of private demand and led to greater foreign indebtedness.

Keywords: Modernization; Saving (search for similar items in EconPapers)
JEL-codes: E21 E44 O11 O16 (search for similar items in EconPapers)
Date: 2000
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