The Structure of Public Debt in Mexico
Keywords:
public debt, debt structure, inflation uncertainty, exchange rate uncertainty, MexicoAbstract
This paper studies the evolution and composition of the public debt of Mexico, with an emphasis on the internal components. The results of the analysis suggest that there is no evidence of a strong relationship between the premia payed by the different instruments and the structure of the public debt. Consequently, we refute the widespread notion that public indebtedness policies have increased the cost of servicing the debt. The empirical analysis suggests that the Mexican government increased the share of domestic currency denominated instruments in the public debt as a response to increased inflationary uncertainty. On the contrary, the government reduced the share of foreign currency denominated instruments in the public debt as a response to increased exchange rate uncertainty. This is interpreted as consistent with the anti-inflationary commitment of the government because it kept the domestic debt indexed to inflation and, thus, reduced the incentives to liquefy the debt via price increases.Downloads
References
Alesina, A., Prati, A., & Tabellini, G. (1990). Public confidence and debt management: A model and a case study of Italy. En: R. Dornbusch y M. Draghi (editores), Public Debt Management: Theory and History. Cambridge Univ. Press, 94–117.
Aspe, P. (1993). El camino mexicano de la transformación económica. Fondo de Cultura Económica. México.
Atkeson, A., & Ríos-Rull, J. V. (1995). The balance of payments and borrowing constraints: An alternative view of the Mexican crisis. Journal of International Economics, 41(3-4), 331–349. https://doi.org/10.1016/s0022-1996(96)01440-7
Barro, R. (1995). Optimal debt management. NBER Working Paper Nº 5327, octubre.
Blackburn, K., & Sola, M. (1993). SPECULATIVE CURRENCY ATTACKS AND BALANCE OF PAYMENTS CRISES. Journal of Economic Surveys, 7(2), 119–144. https://doi.org/10.1111/j.1467-6419.1993.tb00162.x
Bohn, H. (1988). Why do we have nominal government debt? Journal of Monetary Economics, 21(1), 127–140. https://doi.org/10.1016/0304-3932(88)90050-5
Bohn, H. (1990). A positive theory of foreign currency debt. Journal of International Economics, 29(3-4), 273–292. https://doi.org/10.1016/0022-1996(90)90034-j
Bollerslev, T. (1986). Generalizes autorregressive conditional heteroskedasticity. Journal of Econometrics, 31(3), 307–328.
Broker, G. (1993). Government securities and debt management in the 1990s. OECD, Francia.
Calvo, A. G., & Guidotti, P. E. (1990). Indexation and maturity of government bonds: An explanatory model. En: R. Dornbusch y M. Draghi (editores), Public Debt Management: Theory and History. Cambridge University Press.
Calvo, G. A. (1995). Varieties of capital - market crises. Working Paper Series 306. Washington, DC, United States of America: Inter-American Development Bank/Office of the Chief Economist.
Calvo, G. A. (1998). Servicing the public debt: The role of expectations. American Economic Review, 78(4), 647–661.
Calvo, G. A., & Guidotti, P. E. (1992). Optimal maturity of nominal government debt: An infinite-Horizon model. International Economic Review, 33(4), 895–919. https://doi.org/10.2307/2527149
Calvo, G. A., & Mendoza, E. G. (1996). Mexico's balance-of-payments crisis: A chronicle of a death foretold. Journal of International Economics, 41(3-4), 235–264. https://doi.org/10.1016/s0022-1996(96)01436-5
Campbell, J. Y. (1995). Some lessons from the yield curve. Journal of Economic Perspectives, 9(3), 129–152. https://doi.org/10.1257/jep.9.3.129
Cassard, M., & Folkerts-Landau, D. (1998). Sovereign debt: Managing the risks. Finance and Development, 34(4), 12–15.
Cermeño, R., Hernández, F., & Villagómez, A. (2001). Regímenes cambiantes, fragilidad financiera y estructura de deuda. En: Estudios Económicos, Colegio de México, México DF. Por aparecer.
Cline, W. (1995). International debt reexamined. Institute for International Economics.
Cole, H. L., & Kehoe, T. J. (1996). A self-fulfilling model of Mexico's 1994–1995 debt crisis. Journal of International Economics, 41(3-4), 309–330. https://doi.org/10.1016/s0022-1996(96)01439-0
Diebold, F. X., Lee, J. H., & Weinbach, G. C. (1994). Regime switching with time-Varying transition probabilities. En: C. Hargreaves (ed.), Nonstationary Time Series Analysis and Cointegration, Advanced Texts in Econometrics. Oxford University Press, 283–302.
Dornbusch, R., & Draghi, M. (1990). Introduction. En: R. Dornbusch y M. Draghi (editores), Public Debt Management: Theory and History. Cambridge University Press.
Eaton J, M. (1981). Debt with potential repudiation: Theoretical and empirical analysis. Review of Economic Studies, XLVIII (152), 289–310.
Eichengreen, B., & Portes, R. (1986). Debt and default in the 1930s. European Economic Review, 30(3), 599–640. https://doi.org/10.1016/0014-2921(86)90012-7
Giavazzi, F., & Pagano, M. (1990). Confidence crises and public debt management. En: R. Dornbusch y M. Draghi (editores), Public Debt Management: Theory and History. Cambridge University Press, 125–142.
Gil-Diaz, F., & Carstens, A. (1996). Some hypotheses related to the Mexican 1994-95 crisis. Documento Nº 9601. Banco de México/Dirección General de Investigación Económica.
Goldfajn, I. (1998). Public debt indexation and denomination: The case of Brazil. IMF Working Paper, 98-18. Washington D.C.
Grier, K., & Hernández, F. (1998). The real exchange rate process and its real effects: Theory and practice. Documento de Trabajo Nº 187, CIDE, México.
Hardouvelis, G. A. (1994). The term structure spread and future changes in long and short rates in the G7 countries. Journal of Monetary Economics, 33(2), 255–283. https://doi.org/10.1016/0304-3932(94)90003-5
Hernandez-Trillo, F. (1995). A model-based estimation of the probability of default in sovereign credit markets. Journal of Development Economics, 46(1), 163–179. https://doi.org/10.1016/0304-3878(94)00053-f
Kamin, S. B., & Rogers, J. H. (1996). Monetary policy in the end-game to exchange-rate based stabilizations: The case of Mexico. Journal of International Economics, 41(3-4), 285–307. https://doi.org/10.1016/s0022-1996(96)01438-9
Kaminsky, G., Lizondo, S., & Reinhart, C. M. (1997). Leading indicators of currency crisis. Working Paper Nº 79. International Monetary Fund.
Krugman, P. (1979). A model of balance-of-Payments crises. Journal of Money, Credit and Banking, 11(3), 311–325. https://doi.org/10.2307/1991793
Krugman, P. (1998). What happened in Asia. mimeo.
Miller, V. (1997). Why a government might want to consider foreign currency denominated debt. Economics Letters, 55(2), 247–250. https://doi.org/10.1016/s0165-1765(97)00068-2
Missale, A. (1997). Managing the public debt: The optimal taxation approach. Journal of Economic Surveys, 11(3), 235–265. https://doi.org/10.1111/1467-6419.00033
Missale, A., & Blanchard, O. J. (1994). The debt burden and debt maturity. The American Economic Review, 84(1), 309–319.
Newey, W. K., & West, K. D. (1987). A simple, positive semi-Definite, heteroskedasticity and autocorrelation consistent covariance matrix. Econometrica, 55(3), 703–709. https://doi.org/10.2307/1913610
Oks, D. F. (1991). Devaluation expectations and interest rates in Mexico: The role of domestic debt management. Washington, D.C., United States of America. Documento mimeografiado.
Ortiz, G. (1994). La reforma al sistema financiero. Fondo de Cultura Económica. México.
Pazarbasioglu, C. Y., & Otker, I. (1997). Likelihood versus timing of speculative attacks: A case study of México. European Economic Review, 41(3-5), 837–848.
Sachs, J., Tornell, A., & Velasco, A. (1995). The collapse of the Mexican peso: What have we learned? Massachusetts, United States of America. Documento mimeografiado.
Sachs, J., Tornell, A., & Velasco, A. (1996). The Mexican peso crisis: Sudden death or death foretold? Journal of International Economics, 41(3-4), 265–283. https://doi.org/10.1016/s0022-1996(96)01437-7
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2001 Fausto Hernández Trillo, Alejandro Villagómez
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Article usage
- ViewsTimes this article's page was opened since the journal started recording statistics. One person can visit more than once.
- 168
- DownloadsTimes the full text of this article (usually the PDF) was opened or downloaded.
- 220
All time, as recorded by the journal.
Last 2 years: 49 views, 113 downloads.
1.31 downloads per view (journal average 1.65).Downloads of the full text for every abstract view of this article, compared with the whole journal.
Explore the journal's metrics
