This paper investigates the effect of trade liberalization on the exchange rate passthrough (ERPT) to import prices. To do so, it employs an empirical estimation of the effects of North American Free Trade Agreement (NAFTA) on the Mexican ERPT, and uses a Ricardian general equilibrium model. The model identifies two channels that explain how the trade liberalization alters the ERPT. The first channel is the direct relationship between the tariffs and the pass-through by good. The second channel is the effect that tariffs have on the composition of imports, altering indirectly the aggregate pass-through.

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Central bank communication is becoming a key aspect of monetary policy. How much financial markets listen and, possibly, understand Banco de Mexico"s communication on its monetary policy stance should be a key consideration for the central bank to further modernize its monetary policy toolkit. In this paper, we tackle this issue empirically by using our own index of the tone of communication based on Banco de Mexico"s speeches and statements and find that Mexican money markets do not only listen but they also understand the stance of monetary policy conveyed in the central bank"s words. Regarding the ability to listen we find that both the volatility and volume in the money market rates change right after communication from Banco de Mexico"s governing body. As for the markets" understanding, we document a statistically significant rise in money market rates the more hawkish communication is. All in all, our results show strong evidence of effective oral and written communication from the Central Bank towards Mexico"s money markets.

Why does the Mexican peso depreciate against the dollar?: the role of productivity differentials / Arnoldo López-Marmolejo, Daniel Ventosa-Santaulària. p. cm. -(IDB Working Paper Series ; 957) Includes bibliographic references. 1. Foreign exchange rates-Mexico-Econometric models. 2. Industrial productivity-Mexico-Econometric models. 3. Peso, Mexican.

Women's participation in the labor market in Central America is low for the international standard. Increase such participation is on the agenda of many policymakers who want to improve women's access to quality employment. In this paper, we use data from Central America, Panama, and the Dominican Republic to assess whether gender equality in the law helps increasing women's participation in the labor force and, therefore, boosts GDP per capita. The study is based on two econometric methodologies to evaluate distinct aspects of the economic mechanism.