| By: |
Christina E. Bannier (Author-Workplace-Name: Department of Finance, Goethe University Frankfurt);
Jochen Michaelis (Author-Workplace-Name: Department of Economics, University of Kassel) |
| Abstract: |
In the Mexican Peso crisis 1994/95, the lack of readily available information,
particularly regarding monetary aggregates, has often been commented on. This
paper scrutinizes the events and analyzes empirically whether information
disparities with respect to economic fundamentals attributed to triggering the
crisis. Using historical forecast data collected by Consensus Economics, it is
shown that uncertainties as measured by the forecast variation played a
signi.cant role in explaining the pressure on the .xed Peso rate. This e.ect
is additional to the one that actual and expected fundamentals had on the
exchange rate pressure. Furthermore, the impact of information disparity is
found to be contingent on the prevailing market sentiment. For the Mexican
case it even seems that the central bank’s strategy of not publicly disclosing
information was detrimental especially because the market was generally
optimistic with regard to the monetary development. |
| Keywords: |
Currency Crisis, Speculative Attack, Private and Public Information, Transparency |
| JEL: |
F31 D84 D82 |
| Date: |
2003–02 |
| URL: |
http://d.repec.org/n?u=RePEc:kas:wpaper:44/03&r=ifn |