THE MEXICAN FINANCIAL CRISIS OF DECEMBER 1994 AND LESSONS TO BE LEARNED

When the mexican financial crisis ocurred in dicember,1994, there was little information with which to analyze the prospects, but there were many similarities between the adjustment that Mexico went through in conection with the debt crisis of 1982-83. The time paths of crucial variables in the two situations, 1994-95 and 1982-83, has benn studied in order to gain some insight, allowing, of course, for special circumstances that were important on each occasion.

A main finding is that the earlier crisis required a two year adjustment, but current circumstances lead the full model to extrapolated a milder contraction and faster (one year) recovery. These calculations have benn useful interpreting some of the noneconometric aspects of Mexico´sadjustment stances that precipitated the crisis in the firs place.