The human nose is an important organ of respiration which by virtue of its valvular influence becomes a significant effector of respiratory resistance over a wide range of ventilatory requirements. In man its effectiveness in this regard is related to its flow limiting segment (FLS) located at the limen nasi. Its passive valvular effect is additionally modified by active respiratory contractions of the dilator naris muscle (DNM) controlled through the VII cranial nerve by the brain stem respiratory center. Its behavior, quantitatively determined in human beings and experimental animals, is summarized. 1) In man, phasic DNM activity operates during eupneic nasal breathing and varies directly with ventilatory resistance. 2) The elimination of all measurable ventilatory resistance results in complete cessation of DNM activity. 3) Over time, reduced resistance produces difficulty in reestablishing dilator function once it is physiologically lost. 4) DNM respiratory activity is modified by pulmonary mechano- and pressure-receptors via afferent vagal pathways. The response of nasal dilators in valvular control, therefore, appears dependent on the physiologic integrity of the vagus nerves. It is our belief that nasal valvular control has not previously been appreciated in this context.

Using a vector error correction model I test whether shocks in the funding liquidity conditions in the U.S. and Europe separately explain deviations from the covered interest parity (CIP) between the U.S. Dollar and the Mexican Peso. I find that: (1) Apparent deviations from the CIP seem to be persistent, unless a closer measure to the true costs of funding for the agents is considered. (2) A stable long-run equilibrium relation emerges when I include the effects of funding liquidity shocks stemming from the U.S. and Europe. (3) The exchange rate forward premium adjusts towards a long-run equilibrium relation given by the CIP. (4) Surprisingly, the yield on 1-month Mexican CETEs has its own stochastic trend despite the strong relation between the U.S. and Mexico's economies. (5) Analysis confirms that both future and spot exchange rates are affected by shocks stemming from the U.S. Treasury Bills, the funding liquidity in the U.S. and Europe, and the Mexican CETEs.

Este trabajo analiza los cambios recientes en la importancia relativa de los determinantes de los flujos de capital hacia las economías de mercados emergentes. Para ello, estimamos modelos de vectores autorregresivos (VAR) para el período 2009-2020. Con base en estos modelos, estimamos los efectos sobre los flujos de deuda de choques a sus determinantes. Posteriormente, cuantificamos la contribución de cada una de las variables incluidas en el modelo para explicar la evolución de estos flujos en cada mes de la muestra mediante un análisis de descomposición histórica. Los resultados principales indican que la contribución de la aversión al riesgo global para explicar la evolución de los flujos de deuda aumentó durante marzo de 2020 en comparación con el pasado, aunque su importancia relativa ha disminuido desde entonces, particularmente a medida que mejoró el desempeño de los mercados financieros.

No abstract

This paper tests and quantifies the effects of reduced funding liquidity conditions on the covered interest parity (CIP) relating the U.S. Dollar-Mexican Peso market. To this end, a vector error-correction model is estimated. Results suggest, first, that apparent deviations from the CIP disappear when measures of funding liquidity for market participants are considered. Second, the exchange rate forward premium and the U.S. interest rate adjust towards the CIP cointegrating relationship. Finally, a structural analysis shows that deviations from CIP are mostly determined by shocks on the funding liquidity in the U.S. while funding liquidity conditions in Europe also have a non-negligible role. From the policy perspective, the paper underlies the relevance of funding liquidity measures when assessing whether the foreign exchange market works efficiently. As ever, there are some caveats in the analysis to consider. First, funding liquidity measures may shift from non- to stationary regimes. Second, market participants may not able to fund their liquidity at reference rates. The financial series present considerable ARCH-like behaviour, this may be a source of information to explore in further work.