Financial contagion and Suden Stops of capital inflows experienced in emerging-markets crises may originate in an explosive mix of lack of policy credibility and world capital market imperfections that afflict emerging economies with national currencies. Hence, this paper argues that abandoning...

This paper identifies and analyses the fundamental structural shocks that have explained the short run fluctuations of the Venezuelan economy in its recent history. For this purpose, we estimate a dynamic factor model (GDFM) with a panel of 115 variables and evaluate the effects of a monetary...

It has been widely believed that Mexico’s rapid economic growth during the 1934-1956 period was only possible through an expansionary economic policy financed by inflationary means. Hence its contrast with the Stabilizing Development policy of the 1960’s, considered the golden age of rapid...

In this model, monetary policy follows an inflation targeting scheme, using the interbank interest rate as the instrument of policy, while the money supply remains endogenous. On the other hand, a limit for the fiscal deficit as a percentage of GDP is set as the rule for fiscal policy, public...

This paper examines the impact of the monetary policy of the United States, using the interest rate as instrument, on unemployment and inflation rates of Puerto Rico: an economy with special features. We discuss a theoretical model that support the construction of a VAR system defined by the...

This study takes stock of the institutional reform of monetary policy in Latin America since the early 1990s. It argues that strengthening the legal independence of central banks, together with macroeconomic policies, was instrumental in reducing inflation from three-digit annual rates in the...

The document evaluates the importance of the credit market condition on the investment of firms that trade in the Bolsa Mexicana de Valores. The analysis shows that the degree of liquidity constraints that such firms face has increased since 1995. In addition, it is found that the degree of...

The frequency of financial crises over recent decades makes an in-depth study of the phenomenon imperative. This should involve particular attention to those points the different crises have in common, so as to draw lessons that can be used by financial authorities, regulators and the actual...

This paper analyzes central banks’ role in banking crises in Latin America. It finds that, except in a handful of cases, where bank resolution was timely executed, central bank money was used in large scale to contain and manage systemic and small crises alike. However, pouring money into the...

This article analyzes Banco de Mexico’s communication. To do so, it identifies certain phrases and words in the monetary policy decision announcement and assigns to them a numerical value which results in a communication index. Incorporating this index in Taylor rules, it is found that Banco...