Article Abstract:
Mexico's monetary policy may be faulted in relation to the Tequila Crisis of 1994-1995 as it failed to circumvent the devaluation and the subsequent financial trouble which followed. However, Mexico's monetary and fiscal policies in 1994 appeared to be appropriate and well managed. Thus, perhaps the most important lesson its financial crisis holds for monetary policymakers is that it is considerably difficult to predict how close one is to the edge of the cliff, how high that cliff is and how far the fall might be.
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Article Abstract:
It is argued that the most important lesson the Tequila Crisis of 1994-1995 holds for Argentina is that it has an excellent monetary system and a potentially excellent financial system but still has considerable progress to make to develop the monetary and financial systems it desires. Despite the short term difficulties arising from the Tequila effect, Argentina must continue to correct existing flaws in its financial system, such as the need for a monetary disciplinary regime for its provincial governments.
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Article Abstract:
The effect of the Tequila Crisis of 1994-1995 on Uruguay illustrated the special relevance of the economies of Argentina and Brazil to the Uruguayan economy, which experienced the direct impact of crisis only to a small extent. The adverse impact of the Tequila effect on Argentina, however, had considerable repercussions on the Uruguayan economy. The most important lesson Uruguay learned from the crisis is that the key to its stability is maintaining the solvency of the public sector.
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