This paper studies the behavior of interest rate differentials in Mexico during the 1992-94 period. It shows that the currency risk premia is positively related to the share of peso denominated debt in total debt and that the magnitude of this effect is considerable. For every 1 percentage point...

This paper studies the Mexican and Israeli experiences with a target zone. The first part of the paper develops a model of exchange rate determination under a target zone regime with stochastic realignments and examines the conditions under which the adoption of the target zone, instead of a...

Inflation targeting (IT) has been adopted by a growing number of countries and Latin America has been part of this world trend. This paper reviews the recent IT experiences of Brazil, Chile, and Mexico, applying a common empirical framework to the three country cases. Inflation performance under...

This paper examines the impact of financial liberalization on fixed investment in Mexico, using establishment-level data from the manufacturing sector. It analyzes changes in cash-flow sensitivities and uses an innovative approach to explore the role of real estate as collateral and deal with a...