Structural Volatility in Mexico: A Policy Report

54 Pages Posted: 21 Apr 2011

See all articles by Ricardo J. Caballero

Ricardo J. Caballero

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: August 2000

Abstract

This paper surveys Mexico`s economic weaknesses and provides related policy recommendations. Current problems include weak international financial links and external conditions, a recurrent credit crunch and financial underdevelopment problem, with particularly fragile banks, a weak fiscal situation, due to extreme vulnerability to internal and external shocks, and a latent monetary policy credibility problem. The paper`s policy recommendations include improving external financial links, reducing direct exposure to external shocks, accelerating domestic financial deepening and strengthening existing arrangements, reducing public accounts exposure to internal and external shocks, and stabilizing very high and very low frequency movements in the nominal exchange rate.

Suggested Citation

Caballero, Ricardo J., Structural Volatility in Mexico: A Policy Report (August 2000). IDB Working Paper No. 351, Available at SSRN: https://ssrn.com/abstract=1817219 or http://dx.doi.org/10.2139/ssrn.1817219

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