Fear of floating or monetary policy as usual? A structural analysis of Mexico's monetary policy

Monetary policy and inequality under household heterogeneity and incomplete markets

“…Using a DSGE model, Best (2013) corroborates the diminishing importance of nominal exchange rates in the determination of nominal interest rates. Using a similar framework, Cermeño et al (2012) find that the Central Bank in Mexico targets both inflation and the output gap.…”

Oil prices and Mexico’s exchange rates in North America

“…Accordingly, oil price fluctuations play an important role in the Mexican economy. Secondly, evidence indicates that since the early 2000s, the central bank in Mexico has been able to implement a solid and credible monetary policy, which has resulted in maintaining the purchasing power of the Mexican peso (Best, 2013; Torres and Shepherd, 2014; Córdova and Padilla, 2016). Thirdly, Volkov and Yuhn (2016) find a strong link between oil prices and exchange rates for Mexico, and de Mello and Moccero (2011) show that nominal exchange rate movements play a crucial role in the central bank’s reactionary decisions.…”

“…Evidence indicates that changes in monetary policy since 2000 have contributed to maintaining the purchasing power of the Mexican peso. Best (2013) notes that the central bank policy shifted from a predetermined exchange rate to a floating exchange rate in order to enhance the effectiveness of monetary policy. Torres and Shepherd (2014) show that the explicit inflation‐targeting regime has been the centrepiece of monetary policy, especially in cases where the exchange rate is responsible for causing inflation.…”

“…Firstly, Mexico is one of the world’s largest crude oil‐exporting countries, and oil revenue has historically been the main source of government revenue (Reyes and Blanco, 2008). Secondly, in response to the currency crisis during 1994–1995, the central bank implemented changes in monetary policy, which gave policymakers a greater ability to mitigate adverse shocks to the economy in addition to controlling inflation (Best, 2013). Torres and Shepherd (2014) note that inflation targeting has been the centrepiece of monetary policy, especially in cases where the exchange rate is responsible for causing inflation.…”

Determinación del tipo de cambio nominal en México, 1990-2017: una perspectiva de activos

“…El tipo de cambio nominal, en este sentido, se mantiene sobrevalorado en el marco de un ajuste controlado de depreciaciones a lo largo del periodo bajo estudio (Martínez et al, 2001;Best, 2012). Además, se observa una tasa de depreciación de más de 50% en la valoración de la paridad peso-dólar desde 2014-2015.…”