During the 1990s, many Latin American countries began to address their problems with recession, inflation, and unemployment through dramatic economic reforms and monetary policy strategies that included exchange rate pegs, monetary aggregate targeting, or inflation targeting. Inflation...

This paper uses a rational expectations macroeconomic model in which economic agents formulate the probability about the sustainability of the economic policy - that is, policy credibility - using current and lagged values of government expenditures and lagged values of the inflation rate. The...

During the past fifteen years, financial markets in Latin America have experienced a major transformation. This process and its effects on the nature of risks and policy challenges in Latin America were the focus of a May 2007 conference in Mexico City sponsored by the Representative Office for...

Motivated by the dollarization debate in Mexico, we estimate an identified vector autoregression for the Mexican economy using monthly data from 1976 to 1997, taking into account the changes in the monetary policy regime which occurred during this period. We find that 1) exogenous shocks to...

We explore two popular approaches to empirical analysis of monetary policy: the New Keynesian and the identified vector autoregression approaches. Stylized models of private behavior coupled with simple rules describing policy behavior characterize New Keynesian work. Vector autoregressions...