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

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  • Tony Caporale
  • Julia Paxton

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.

Suggested Citation

  • Tony Caporale & Julia Paxton, 2011. "From debt crisis to tequila crisis: inflation stationarity through Mexico's turbulent decades," Applied Economics Letters, Taylor & Francis Journals, vol. 18(16), pages 1609-1612.
    • Handle: RePEc:taf:apeclt:v:18:y:2011:i:16:p:1609-1612
    DOI: 10.1080/13504851.2011.554365
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    Cited by:

    1. Luis A. Gil-Alana & Andrea Mervar & James E. Payne, 2017. "The stationarity of inflation in Croatia: anti-inflation stabilization program and the change in persistence," Economic Change and Restructuring, Springer, vol. 50(1), pages 45-58, February.
    2. Carlos Carrasco & Jesus Ferreiro, 2013. "Inflation targeting in Mexico," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 35(3), pages 341-372.

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