We construct a dynamic general equilibrium model of an open economy and use it to examine issues of trade liberalization in Mexico. In particular, we consider the fiscal implications of quotas and tariffs and, accordingly, their removal. We show that, in the short run, there may be negative...

This Report on the Observance of Standards and Codes (ROSC) Data Module provides an assessment of Mexico's macroeconomic statistics against the Special Data Dissemination Standard (SDDS) complemented by an assessment of data quality based on the IMF's Data Quality Assessment Framework (DQAF)...

Concluding Remarks This note analyzed the recent fiscal reforms, which can make the fiscal framework more instrumental in addressing challenges that Mexico will likely face in coming years. Mexico would benefit from building of fiscal policy buffers to reduce the exposure to high financing and...

KEY ISSUES Context: Over the past year, Mexico has maintained macroeconomic stability and has made significant progress in advancing growth-oriented structural reforms. The country’s close ties with the global economy, while a source of strength, heighten the economy’s exposure to external...

EXECUTIVE SUMMARY ? Background and Outlook. Mexico has been resilient to global uncertainty, in large part due to confidence in the strong policy framework and sound policy management, which are underpinned by a broad consensus about macroeconomic stability and by the signaling and insurance...

This paper explores how interest rates on domestic financial assets in Mexico are linked to expectations of exchange rate changes and to perceptions about the default risks contained in Mexico’s external debt. It is shown that the interest rate differentials between peso- and U.S....

The value-added tax (VAT) is often a major component of national fiscal structures. While its effects on allocative efficiency, inflation, income distribution, and tax administration have been addressed, little work, exists on the theoretical base of a VAT, given its structure. This is essential...

The paper analyzes the evolution of Mexico’s approach to commercial bank debt restructuring since the outbreak of the 1982 debt servicing problems. It discusses the key elements of the approach, their implementation, and their interaction with developments in the “international debt...

This paper examines credibility and reputational factors in explaining the December 1994 crisis of the Mexican peso. After reviewing events leading to the crisis, a model emphasizing the inflation-competitiveness trade-off is presented to explain the formation of devaluation expectations....