The Mexican Crisis: Testing the Consensus

Abstract

This chapter traces the influence of the idea of orderly liberalization on the policies pursued by the IMF after the Mexican crisis. Specifically, the chapter is organized as follows. The first section describes the events that led to the crisis and the unfolding of the financial crisis. The second section shows how the IMF interpreted the Mexican crisis, that is, it shows how the idea of orderly liberalization set the boundaries on the interpretation of the crisis and on the policies to pursue in its aftermath in order to reform the international financial architecture. The third section goes on to show how the idea of orderly liberalization went unscathed in the aftermath of the crisis across the Fund’s social constituencies for legitimation. After the crisis, the faith in the benefits of capital account liberalization and in the role of the IMF as a promoter and a manager of the risks of liberalization remained largely intact among member countries, academic economists, and private-sector actors.