“The Mexican Peso crisis: What happened theoretically followed by a more practical view using the monetary model”

This bachelor thesis is a review of the Mexican Peso crisis. The existing literature about the Peso crisis is followed by a theoretical paragraph. The shadow exchange rate is important. Concepts of the monetary model will be explained and a sequence of events regarding the Peso crisis completes the theoretical part. This theoretical part is followed by a practical research, which tries to check if Mexican authorities reacted on the right way according to the monetary model. The main result is that according to the monetary model Mexican authorities reacted too late by changing the exchange rate system. Using statistical analysis, they had to change the system earlier. In results the E-views monetary regression will be discussed by using OLS and testing the coefficients. All the results are discussed here. After this, policy relevance takes its place. Conclusions is about answering the three hypotheses in which the first hypothesis is leading in importance. Shortcomings of the research makes this bachelor thesis complete followed by the chapter references.