From debt crisis to tequila crisis: inflation stationarity through Mexico's turbulent decades

Tony Caporale and Julia Paxton

Applied Economics Letters, 2011, vol. 18, issue 16, 1609-1612

Abstract: The volatility of Mexican inflation throughout the 1980s' debt crisis and the 1994 tequila crisis provides an interesting backdrop to test for structural breaks and inflation stationarity in a developing country context. By allowing for multiple breaks, four inflationary regimes are identified during the period 1980 to 2004. Initial unit root tests reject stationarity; however, by incorporating structural break analysis, inflation is found to be I(0). The structural break analysis and the stationarity analysis point to monetary and fiscal determinants of inflation.

Keywords: Mexico; inflation; structural breaks (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1080/13504851.2011.554365

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