There is no agreement regarding the growth-enhancing effects of financial liberalization, mainly because it is associated with risky international bank flows, lending booms, and crises. In this paper we make the case for liberalization despite the occurrence of crises. We show that in developing countries trade liberalization has typically been followed by financial liberalization, which has indeed led to financial fragility and a greater incidence of crises. However, financial liberalization also has led to higher GDP growth. In fact, the fastest-growing countries are typically those that have experienced boom-bust cycles. That is, there is a positive link between GDP growth and the bumpiness of credit, which is captured by the negative skewness --not by the variance--of credit growth. To substantiate our interpretation of the data we present a model that shows why in countries with severe credit market imperfections, liberalization leads to higher growth and, as a byproduct, to financial fragility. Thus, occasional crises need not forestall growth and may even be a necessary component of a developing country's growth experience. Finally, our analysis indicates that foreign direct investment does not obviate the need for risky international bank flows, as the latter are the only source of financing for most firms in the nontradables sector.

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Mexico, a prominent liberalizer, failed to attain stellar gross domestic product (GDP) growth in the 1990s, and since 2001 its GDP and exports have stagnated. In this paper we argue that the lack of spectacular growth in Mexico cannot be blamed on either the North American Free Trade Agreement (NAFTA) or the other reforms that were implemented, but on the lack of further judicial and structural reform after 1995. In fact, the benefits of liberalization can be seen in the extraordinary growth of exports and foreign domestic investment (FDI). The key to the Mexican puzzle lies in Mexico's response to crisis: a deterioration in contract enforceability and an increase in nonperforming loans. As a result, the credit crunch in Mexico has been far deeper and far more protracted than in the typical developing country. The credit crunch has hit the nontradables sector especially hard and has generated bottlenecks, which have blocked growth in the tradables sector and have contributed to the recent fall in exports.

En este trabajo se describe la evolución que ha experimentado el esquema de política monetaria en México de 1995 a la fecha, pasando de uno sustentado en objetivos cuantitativos de crecimiento de los agregados monetarios a otro en el cual las acciones discrecionales de política monetaria, con el fin de alcanzar los objetivos de inflación, cobraron mayor relevancia. Además se analizan dos temas que han generado dudas sobre la instrumentación de la política monetaria: el uso del objetivo de saldos acumulados y la efectividad de éste para afectar la inflación por canales alternativos al del tipo de cambio. Los resultados principales indican que el comportamiento de la tasa de interés real ha sido determinado por las variables tradicionales que guían las acciones discrecionales de cualquier Banco Central y que dichas tasas han afectado de manera estadísticamente significativa a la demanda agregada y al crédito.