The aim of this paper is to investigate how the central bank of Mexico - a prototypical emerging market economy (EME) - adjusted its reaction coefficients according to an estimated Taylor-type rule in response to the COVID-19 pandemic and the posterior surge in inflation. To do so, we estimate a...

Are restrictions on fiscal policy necessary for monetary policy to be able to deliver price stability? When households are Ricardian, the net present value of future fiscal surpluses needs to equate the real value of government debt absent inflation. We show that when households are not...

Fiscal rules have been shown to support fiscal discipline by improving government budget balances and restraining the growth of debt. However, questions remain about what enhances their effectiveness and how certain conditions help to build the credibility needed for their survival and success....