The demand for money and inflation in Mexico 1980-1999: implications for stability and real seigniorage revenues

This paper presents estimates of the demand for money function and the Phillips curve using quarterly data for the Mexican economy over the period 1980--1999. These estimates are used to test restrictions on the dynamic process of the errors and cross-equation parameter restrictions suggested by economic theory. The parameter estimates obtained are used to investigate the stability of the inflation process and the extent to which real seigniorage revenues have been exploited within the Mexican economy.