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.
TIJ's Research Journal of Social Science & Management - RJSSM, 2018
Abstract: The Mexican 1994 crisis is also known as the Mexican pesos crisis, is the first global economic crisis in XX century. The crisis started at 1994 and affected whole world, especially Latin America. The crisis started with the sudden devaluation of the Mexican peso. But the root of the crisis runs deeper: it started a few decades earlier. At the beginning of the decade of 1930 after Mexican Revolution and a few years of instability, Mexico entered in political stability and the result of that was an economic growth. Through the years Mexico became more and more a developed country. Until 1968 Mexico had been living what is known as the Mexican miracle. After this year economic and political crisis started. A few years during the late 1970s oil boom created a feeling of economic stabilization, but that was just a mirage. Many wrong decisions in the economic and political aspect destroyed the achieved progress. With not enough preparation, Mexico entered in organizations like ...
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.
2014
The international government accounting system has required Mexico's federal government to change the way it presents accountability information. Government accounting standards impose the obligation to recognize the effects of inflation on financial information. The purpose of this study is to assess the efficacy of preparing financial information on the accounting basis of accumulation or accrual, in financial statements presented in currencies of legal tender within inflationary contexts that entail a significant loss of purchasing power of that currency. This paper studies the accounting records presented by the government of Baja California Sur, and finds that the financial and budget information provided by agencies of the centralized state government and state-owned enterprises do not conform to international and national financial reporting standards regarding the recognition of inflation in those financial statements.
The origin of Mexico's 1994 financial crisis
Cato Journal, 1998
After nearly a decade of stagnant economic activity and high inflation in Mexico, the Mexican government liberalized the trade sector in 1985, adopted an economic stabilization plan at the end of 1987, and gradually introduced market-oriented institutions. Those reforms led to ...