Mexico and the IMF in the 1990s. Old and new issues on capital account liberalization and emerging market countries

The 2007-2008 financial crisis has once again prompted a Lively debate on the benefits and risks of capital account liberalization in emerging market countries. This paper contributes to this debate by looking back at the 1990s through the lenses of the International Monetary Fund (IMF). On the basis of archival research, the paper argues that the IMF looked at Mexico as evidence of the benefits of global financial integration both before and after the 1994 crisis, focusing on macroeconomic conditions and underestimating the soundness of the domestic financial sector. In the conclusions, the paper links the findings with the debate that followed the subprime crisis. Comparative Economic Studies (2010) 52, 589-609. doi: 10.1057/ces.2010.18; published online 2 September 2010 Keywords: Mexico, IMF, capital account liberalization, crisis
JEL Ctassifications: F3, N2 The financial crisis that started in the summer of 2007 in the small segment of the US subprime market has rekindled the debate about the benefits [...]