IESET.
Policies·mx_pacto_solidaridad_economica_1987

Pacto de Solidaridad Económica (Mexico, 15 December 1987)

MEX·1987 – 1988·enacted 1987-12-15candidate
moveslabour market flexibility↓monetary expansion direction↓spending level↓

What the policy did

Heterodox social pact between government, labour (CTM), business (CCE), and agriculture (CNC). Froze minimum wages, key prices, and exchange rate after an initial devaluation; accompanied fiscal consolidation and monetary tightening. CPI fell from 159% (1987) to 52% (1988) and 19% (1989). Template for subsequent PECE pacts under Salinas.

Policy-content fingerprint — what this policy moved, on which axes

Per invariant 3, reforms are scored by what they did on each channel-separated axis, not by the party that enacted them. This fingerprint is how the policy-match engine finds historical analogues.

intended
↓
labour market flexibility
regulatory.labour_market_flexibility
Ease of hiring/firing, collective-bargaining scope, minimum wage rigidity, temporary/permanent contract regulation.
decreased · moderate
less flexible (stronger employment protection)
Statutory wage freeze coordinated through CTM.
↓
monetary expansion direction
monetary.monetary_expansion_direction
Direction of monetary-base expansion decisions relative to trend. Separate from fiscal.transfer_expansion even when correlated.
decreased · moderate
contractionary (balance sheet shrink, rates above Taylor)
↓
spending level
fiscal.spending_level
General government spending as share of GDP, excluding transfers already captured under fiscal.transfer_expansion to avoid double-counting.
decreased · moderate
lower spending share

Enacted by

Empirical evidence — linked hypotheses

Explicit links are curated by the author. Inferred links are hypotheses in the library that test the same axes this policy moved — the framework's answer to "what does the data say about a policy like this?".

Truss 2022 mini-budget shows that unfunded fiscal expansion above the ZLB triggers sharp bond-market and currency responses through expected-inflation and risk-premium channels.
unfunded_fiscal_expansion_above_zlb_bond_market_responseinferred
viafiscal.spending_levelmonetary.monetary_expansion_direction
SUPPORTED — GBP/USD trough on 2022-09-26 (1.0703) was 5.02% below the 2022-09-22 pre-announcement close (1.1269); log-decline +0.0515 clears the 3.0% threshold …
supported
Fiscal multipliers are state-dependent: large at ZLB, small near full employment; no single-number answer is policy-relevant.
fiscal_multipliers_state_dependentinferred
viamonetary.monetary_expansion_directionfiscal.spending_levelregulatory.labour_market_flexibility
REFUTED — sign - OPPOSITE claim +, cumulative_effect=-1.569, h=5, p_h=0.0155
refuted
Across the 2008-2014 ZLB era and the 2020-2021 pandemic-response window, large-scale de-facto monetary finance of fiscal expansion in the US, Japan, and the Eurozone did not produce headline-CPI inflation consistent with naive quantity-theoretic monetisation predictions: cumulative central-bank balance-sheet expansion exceeded 15% of GDP while CPI YoY remained below 3% in each economy across both windows.
monetary_finance_zlb_no_inflationinferred
viamonetary.monetary_expansion_directionfiscal.spending_level
REFUTED — CPI threshold breach: USA zlb_2008_2014 peak 3.81% in 2008; USA covid_2020_2021 peak 4.68% in 2021; Eurozone CPI not loaded
refuted
The Soviet central-planning system, having already exhibited TFP stagnation 1970-1989, underwent a canonical institutional and economic collapse 1989-1998 as plan-enforcement was withdrawn without functioning market institutions in place.
soviet_union_central_planning_gdp_collapse_1989_1991inferred
viamonetary.monetary_expansion_directionfiscal.spending_level
INCONCLUSIVE_DATA_PENDING — no outcome variable loaded; missing: ['derived: count of canonical_metrics with threshold met']
run pending
Countries with stricter employment protection legislation — measured by the OECD EPL indicator (or comparable alternatives where OECD EPL is missing) — experience longer average unemployment duration, holding other controls constant.
labour_market_flexibility_unemployment_durationinferred
viaregulatory.labour_market_flexibility
INCONCLUSIVE_DATA_PENDING — interaction term requested but no loadable constructed interaction variable is defined. The generic panel_fe runner would otherwise …
run pending
Across OECD economies 1995-2021, the cumulative fiscal multiplier on real output at the zero lower bound (defined as quarters with policy rate ≤ 0.50% AND inflation expectations anchored below 2.5%) exceeds 1.2 at horizon h=8 quarters, while the comparable normal-regime multiplier is below 0.7.
zlb_state_dependent_multiplier_pk_framinginferred
viamonetary.monetary_expansion_directionfiscal.spending_levelregulatory.labour_market_flexibility
INCONCLUSIVE_DATA_PENDING — no treatment variable loaded; missing: ['oecd:NAQ_government_consumption', 'manual: Ramey-Zubairy military news shocks; Guajardo-Lei…
run pending
Post-2008 large-scale asset purchase programmes by the Federal Reserve, ECB, Bank of England, and Bank of Japan produced a measurable divergence between asset-price inflation (equities and residential real estate) and headline consumer-price inflation until roughly 2021.
qe_asset_inflation_vs_cpi_divergence_post_2008inferred
viamonetary.monetary_expansion_directionfiscal.spending_level
refuted — Only 2 of 8 countries had even a 0.10 log-point asset-vs-CPI gap by 2020 (mean GAP_2020 = -0.02). The post-2008 divergence story does not survive a pa…
refuted
Strong employment-protection legislation (EPL) with high union wage-setting coverage and limited at-will dismissal produces a three-order causal chain in Southern European labour markets.
strong_union_labour_law_youth_unemployment_south_europeinferred
viaregulatory.labour_market_flexibilityfiscal.spending_level
PARTIAL — coef=+2.943, p=0.252 (above α=0.05); direction inconclusive
partial

Similar historical policies

Ranked by axis-fingerprint overlap with this policy. Direction match bolded — those are the closest historical analogues. Shape of the match is what drives policy-outcome comparison, not the country or party label.

Milei Shock Therapy — Argentina December 2023 onward
ARG·2023
match
2.0
spending levellabour market flexibilitymonetary expansion direction
France tournant de la rigueur (March 1983)
FRA·1983
match
1.9
spending levelmonetary expansion directionlabour market flexibility
EU/IMF/World Bank stand-by arrangement and Bajnai adjustment package (Hungary, 2008-2010)
HUN·2008
match
1.8
spending levellabour market flexibilitymonetary expansion direction
Chun price stabilisation programme (South Korea 1981)
KOR·1981
match
1.8
monetary expansion directionspending levellabour market flexibility
IMF Stand-By Arrangement (Jun 2018, expanded Sep 2018)
ARG·2018
match
1.7
spending levelmonetary expansion direction
Greece Convergence Programme 1994-1999
GRC·1994
match
1.7
spending levelmonetary expansion direction
Israeli Economic Stabilization Plan (July 1985)
ISR·1985
match
1.7
spending levelmonetary expansion direction
Inti heterodox stabilisation plan (Peru, 1985)
PER·1985
match
1.6
spending levellabour market flexibilitymonetary expansion direction

References