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This volume argues that the Mexican crisis of August 1982, in which the country was left facing the prospect of national default and zero economic growth, was not only the result of some fundamental flaws in the country's economy, but is more accurately characterized as a cash flow problem—in the author's words, "a case of illiquidity rather than insolvency." Based on a thorough analysis of the Mexican economy, the book assesses the effectiveness of the various economic programs of the de la Madrid presidency in dealing with the nation's problems.
List of contents
Foreword xiii
Preface xv
Acknowledgments xvii
I. Historical Trends and Sources of Growth 1
Introduction 3
1. An Overview of the Mexican Economy 5
2. Mechanisms of Mexican Economic Growth 28
3. External Sources of Instability 38
II. Economic Policymaking, 1971–82 53
4. Policymaking during the Echeverría Administration, 1971–76 57
5. Policymaking in the Early López Portillo Years: Devaluation and Stabilization 69
6. Industrial Policy under López Portillo 84
7. Fiscal Policy under López Portillo: Prelude to the 1982 Crisis 95
8. Policymaking in López Portillo's Final Year: The 1982 Devaluations and Aftermath 111
III. Empirical Examinations of Policy Impact 123
Introduction 125
9. Scope for Anti-Inflationary Policy 127
10. Dynamics of the Fiscal System 150
11. Macroeconomic Controversies: The Monetarist-Cambridge Interpretations of the Policy Environment 164
12. Impact of Fiscal Policy: A Critique of the Fitzgerald Thesis 179
IV. Scope for Optimal Policymaking 203
Introduction 205
13. Optimal Stabilization Programs, 1975–81 207
14. Scope for Optimal Policy in an Oil-Based Economy, 1982–87 235
15. Optimal IMF-Type Stabilization Programs during the de la Madrid Presidency, 1983–87 260
16. The Policymaking Dilemma 276
Notes 283
Bibliography 297
Index 307
About the author
Robert Looney
