Reducing Inflation through Inflation Targeting: The Mexican Experience1 (original) (raw)
“Changes in Monetary Policy in Latin America post-pandemic (2022), the cases of Central Banks (Brazil, Chile and Mexico)” (Atena Editora), 2023
En América Latina, los Bancos Centrales de Brasil, Chile y México han adoptado medidas en su Política Monetaria para hacer frente a los altos niveles de inflación que afectan no solo a estas economías sino también al mundo en general. Estos países tienen como objetivo lograr la estabilidad de los precios, para lo cual han otorgado autonomía a sus Bancos Centrales desde la década de los 90, conocida como el periodo de la gran moderación. Si bien los países desarrollados han adoptado cambios en sus políticas monetarias después de la crisis del 2008, los países de América Latina han mantenido las mismas medidas implementadas antes de esta crisis, esperando obtener resultados positivos en sus economías. Sin embargo, en la nueva reconfiguración económica, es importante distinguir los posibles efectos que podrían surgir por las constantes altas tasas de interés que establecen los Bancos Centrales de América Latina. Es necesario analizar si estas medidas permitirán recuperar el control sobre los altos niveles inflacionarios o si se requerirá una mayor intervención por parte de la política fiscal para lograr reducir los niveles inflacionarios. En este sentido, resulta crucial evaluar los efectos de la flexibilización cuantitativa que se ha adoptado en los países desarrollados y si puede ser una alternativa para los países de América Latina.
Investigación económica / Escuela Nacional de Economía, Universidad Nacional Autónoma de México
The current international financial system is anchored on the United States dollar. Countries that do not issue the reserve currency must be able to acquire, and indeed accumulate, the currency they cannot issue to carry real and financial transactions. As a result, their external performance shapes and constrains to a significant extent their capacity to pursue domestic policies including fiscal and monetary policies. In this sense countries are said to be 'balanceofpayments' constrained. This paper examines, for the case of Chile, the limitations imposed by external conditions to the undertaking of a monetary policy strategy, inflation targeting, which focuses explicitly on a domestic objective, namely a low and stable rate of inflation. Chile adopted an inflation targeting strategy in 1991. Since, the adoption of the inflation targeting strategy followed two clear and distinct phases. The first one lasted from 1991 to 1999 and can be termed an Eclectic Inflation Targeti...
The 1987 Mexican Disinflation Program: An Exchange-Rate-Based Stabilization?
IMF Working Papers, 1996
We examine whether Mexico's disinflation experience during 1987-94 fits the widely accepted set of stylized facts of exchange-ratebased stabilization (ERBS) on inflation, the boom-recession business cycle, and the external sector. A cursory look at Mexican data shows that the experience fits quite closely the stylized facts of ERBS. However, the paper shows that there were some important differences and peculiarities of the Mexican case that deserve further study, especially regarding the role of the nominal anchor and the nature of the business cycle. two anonymous referees for comments and suggestions.
Socio-Economic Planning Sciences, 1987
Mexico's current crisis has its origins in a number of structural conditions that developed in the 1970s. This paper examines one of these structural impediments, the country's fiscal disequilibrium. An empirical analysis of the country's tax structure indicates that there is ample scope for major tax reforms geared to introducing more responsiveness into the country's tax collection system. Given that the government will have to reduce its budget deficit to comply with IMF stabilization requirements, the analysis indicates tax reform rather than expenditure reduction would be the most efficient policy in achikving this objective.
The Mexican intertemporal budget constraint: Persistent signals of an eventual collapse
Estudios Económicos, 1996
Se examina la sustentabilidad del déficit de cuenta corriente en México antes de la crisis de fines de 1994. El artículo muestra que existían señales de que la economía no estaba satisfaciendo su restricción presupuestaria intertemporal mucho antes de que la crisis se presentara. La metodología usada sigue la de Wickens-Uctum, modificada para incluir el caso de posibles intervenciones.
Gestión de crisis: política monetaria compatible con la economía petrolera
2019
The purpose of this research is to explain monetary policy consistent with the country’s economic conditions. Hence, in this paper, we tried to evaluate the two states of the central bank’s reaction to the dynamic general equilibrium model adapted to the characteristics of the Oil-rich countries economy. In the first instance, the policy maker, with regard to the level of production, diverts inflation from target inflation and exchange rate policy. In the latter case, the basis for deciding the production deviation from potential production, the deviation of future inflation from target inflation and exchange rate, and in both cases, the use of policy experiences is also considered as a variable for policy.El propósito de esta investigación es explicar la política monetaria de acuerdo con las condiciones económicas del país. Por lo tanto, en este documento, intentamos evaluar los dos estados de la reacción del banco central al modelo dinámico de equilibrio general adaptado a las car...
The 1987 Mexican Disinflation Program
1996
This is a Working Paper and the authors) would welcome any comments on the present text Citations should refer to a Working Paper of ihe International Monetary Fund, mentioning the author(s), and the date of issuance. The views expressed are those of the author(s) and do not necessarily represent those of the Fund.
The 1987 Mexican Disinflation Program: An Exchange-Rate-Based Stabilization?" IMF Working Paper no
1996
Abstract: We examine whether Mexico's disinflation experience during 1987-94 fits the widely accepted set of stylized facts of exchange-ratebased stabilization (ERBS) on inflation, the boom-recession business cycle, and the external sector. A cursory look at Mexican data shows that the experience fits quite closely the stylized facts of ERBS. However, the paper shows that there were some important differences and peculiarities of the Mexican case that deserve further study, especially regarding the role of the nominal anchor and the nature of the business cycle. Keywords: stabilization, disinflation, business cycle, nominal anchor. Resumen: Se examina si la experiencia desinflacionaria de México durante el periodo 1987-1994 es compatible con los hechos estilizados de expansión económica y de evolución del sector externo asociados a las estabilizaciones inflacionarias basadas en el tipo de cambio (ERBS, por sus siglas en inglés). Una rápida revisión de los datos muestra que la e...
Fighting inflation in Mexico. Theory and evidence
Journal of Post Keynesian Economics, 2018
Mexico adopted the inflation targeting strategy in 2002, and this came together with declining inflation. According to the economic authorities, this also brought about lower passthrough of exchange rate changes into inflation. The objective of this article is to test the main hypotheses of Mexico's prizestabilization strategy. As a preliminary step, we show evidence whereby the interest rate has not the impact on demand assumed in the conventional view. We then estimate econometric models, which show first of all that inflation depends essentially on the evolution of labor and input costs. Then we demonstrate that higher employment and higher wages associated with higher output do not necessarily entail higher labor costs because productivity also increases when output rises. In the final section, we set forth our main conclusions, which cast doubts on some crucial aspects of the inflation targeting strategy, and propose a different interpretation about why inflation declined in this country.