Macroeconomic Reform and Policy: The Case of Peru - Analyzing the effects of some major economic, political and social changes in the Peruvian Financial market for the period between 1990 and 1992

Authors

Marco A. Hernandez, Massachusetts Institute of Technology

Abstract

This paper discusses the effects of the changes in economic policies and important events, between 1990 and 1992, on the values of an economic sector's equity in Peru. I use event studies to explain the differences in returns during the event window in the main economic sectors in Peru including mining, beer, banking and industrial sector. Four key events are analyzed: The Fujishock, the announcement of policy changes and changes in the legal system, Fujimori's announcement of the dissolution of Congress and the suspension of the Constitution, and the capture of the chief of the Shining Path guerrillas, Guzman.

I estimate the evolution of the abnormal returns of the main economic sectors. The regression results show that these events produced significant changes, both positive and negative, in the Peruvian stock market. I argue possible explanations for these findings and analyze the implications of these in future economic decisions.

Recommended Citation

Hernandez, Marco A. (2002) "Macroeconomic Reform and Policy: The Case of Peru - Analyzing the effects of some major economic, political and social changes in the Peruvian Financial market for the period between 1990 and 1992," University Avenue Undergraduate Journal of Economics: Vol. 7: Iss. 1, Article 4.
Available at: https://digitalcommons.iwu.edu/uauje/vol7/iss1/4