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.
KEYWORDS:
Inflation; stabilization
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