Mexican stabilization plan: 1982-1989
Abstract
The paper analyses economic policy measures related to the 1982-89 Mexican
stabilization plan. It shows that the first phase was predominantly orthodox. In a second step,
a deindexation policy was followed, which kept prices and wages virtually constant during
approximately two years. The results so far have been significant reduction of inflation
rates, the main cost being a loss of foreign exchange reserves and a substantial decrease of
real wages. The Mexican stabilization experiment is usually presented as a successful case
of adjustment to the external sector crisis and inflation reduction. A decisive test of the
program, however, will take place when prices and wages were liberalized.
JEL Classification: E31.
Keywords: Inflation stabilization