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Why is 'The Market' so Unforgiving? Reflections on the Tequilazo

dc.contributor.authorCalvo, Guillermo A.
dc.description.abstractMexico’s financial debacle and its impact on other emerging markets (the Tequila effect) has raised many fundamental questions. Mexico achieved fiscal balance in 1993, undertook several fundamental market-oriented reforms, signed a free trade agreement with a very large market (the NAFTA), became a member of the OECD, and was hailed by international institutions as a paramount example of successful reform. Yet, the December 20, 1994, devaluation brought the economy down like a house of cards. Output fell by more than 7 percent in 1995, the current account deficit sharply swung from about 8 percent of GDP in 1994 to zero, and investors turned their noses away from high-yield Mexican public debt even though the international community had plunked about $50 billion in a rescue package. In addition, Mexican problems quickly spread around the world’s emerging markets, including those exhibiting long and enviable track records.en
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dc.subjecttequila effecten
dc.subjectbalance-of-payments crisesen
dc.subjectoutput collapseen
dc.subjectwage stickinessen
dc.subjectprice stickinessen
dc.subjectpro-cyclical fiscal adjustmenten
dc.titleWhy is 'The Market' so Unforgiving? Reflections on the Tequilazoen
dc.relation.isAvailableAtDigital Repository at the University of Marylanden_us
dc.relation.isAvailableAtEconomics Departmenten_us
dc.relation.isAvailableAtCollege of Behavioral and Social Sciencesen_us
dc.relation.isAvailableAtUniversity of Maryland (College Park, Md.)en_us

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