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The Mexican intertemporal budget constraint: Persistent signals of an eventual collapse

Author

Listed:
  • José A. Núñez

    (Tecnológico de Monterrey, Campus Ciudad de México)

  • Carlos M. Urzúa

    (El Colegio de México and Tecnológico de Monterrey)

Abstract

This paper examines the sustainability of the Mexican current account deficit prior to the December 1994 crisis. It tests whether or not the Mexican economy was satisfying its intertemporal budget constraint, and finds that signals of possible trouble without a change in policies were present long before the crisis. The tests used are based on the Wickens-Uctum criterion for the sustainability of current account deficits, extended to include the case of possible interventions.

Suggested Citation

  • José A. Núñez & Carlos M. Urzúa, 1996. "The Mexican intertemporal budget constraint: Persistent signals of an eventual collapse," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 11(2), pages 167-180.
    • Handle: RePEc:emx:esteco:v:11:y:1996:i:2:p:167-180
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    File URL: https://estudioseconomicos.colmex.mx/index.php/economicos/article/view/257/259
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    References listed on IDEAS

    as
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    6. Rudiger Dornbusch & Alejandro Werner, 1994. "Mexico: Stabilization, Reform, and No Growth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 253-316.
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    More about this item

    Keywords

    intertemporal budget constraint; current account; sustainability of current account deficit; Mexico;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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