Financial fragility and neoliberalism in developing countries

By Andrés Blancas

PKES Working Paper 1110

December 2011
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The aim of this paper is to show the financial fragility dynamics in developing countries following the last theoretical advances. As an empirical application we prove that the Mexican economy has been characterized by financial fragility, mainly during the crisis terms. Financial fragility has created difficult problems for policy makers; in trying to fix it by restricted monetary and fiscal policies, they have triggered the generalized financial crises. Whereby, financial fragility can be diagnosed as an structural problem of developing countries like Mexico and a real potential risk of generalized economic crisis in the process of economic liberalization nowadays.

Keywords: Economic dynamics, financial fragility, developing countries, financial crisis, monetary policy and Mexican economy

JEL classification: C61 E44 E58 F34 O50