Inflation in Pre-Crisis Mexico: A Monetarist Interpretation of the Relative Importance of Internal and External Factors (original) (raw)

Reducing Inflation through Inflation Targeting: The Mexican Experience1

La serie de Documentos de Investigación del Banco de México divulga resultados preliminares de trabajos de investigación económica realizados en el Banco de México con la finalidad de propiciar el intercambio y debate de ideas. El contenido de los Documentos de Investigación, así como las conclusiones que de ellos se derivan, son responsabilidad exclusiva de los autores y no reflejan necesariamente las del Banco de México.

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.

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.

Inflationary Pressure Determinants in Mexico

An ongoing difficult policy issue confronting monetary authorities in many developing economies is the management of a stable price environment. Unstable prices create uncertainty, lower investment, and raise costs of doing business, thus lowering rates of growth. As a result, there exists a widespread need for understanding inflationary dynamics in any country of interest. This paper develops a standard monetary inflation model and augments it to include import and labor cost of production factors in a theoretically plausible manner. Implications for implementing an empirical version of the model are also discussed.

POLÍTICA MONETARIA, INFLACIÓN Y EL CICLO ECONÓMICO

La presente monografía pretende ofrecer al lector una visión general de la moderna la teoría monetaria. Durante la última década, la economía monetaria ha sido uno de las áreas de investigación más fructíferas dentro de la macroeconomía. El esfuerzo de muchos los investigadores a entender la relación entre la política monetaria, la inflación, y el ciclo económico ha llevado al desarrollo de un marco-la llamó así- Nuevo modelo keynesiano-que es ampliamente utilizado para el análisis de la política monetaria. El siguientes capítulos ofrecen una introducción a la estructura básica y una discusión de sus implicaciones políticas.

20 years of crisis in Mexico, 1968-1988

1991

This thesis is devoted to analyzing the political transition that Mexico experienced from 1968 to 1988, through three sources of information; historical documents, economic and demographic statistics and public opinion. The first part of the work examines four particularly relevant historical processes concerning the relationship between State and society that can be identified by very precise symbolic events defined here as crisis: 1) the October 2, 1968, massacre that culminated the student uprising; 2) the August 31, 1976, peso devaluation that marked the climax of the confrontation between the Echeverrista government and the domestic business class; 3) the September 1, 1982, bank nationalization that symbolized the excesses of the oil boom and foreign indebtedness; 4) the October, 1987, stock market crash that ended unrealistic market euphoria of political origin. The second part of the thesis seeks to quantitatively outline these historical processes and establish a basis for c...

Inflation, Monetary Policy and Economic Growth in Mexico. An Inverse Causation, 1970-2009

Modern Economy, 2011

It is demonstrated through an Structural Vector Auto Regression (SVAR) model which distinguishes short and long term effects, that the monetary policy implemented in Mexico (1970-2008) has been successful in reducing inflation at the cost of stagnation, especially after 2002. Inflation Targeting is contradictory in itself because, while it is efficient in improving transparency and credibility of the monetary policy, it does not solve the structural causes of inflation and conversely, increases the financial costs of economic agents.