This paper investigates the dynamic interrelationship among money growth, inflation, and output growth for Colombia and Mexico on the basis of implementation of a vector autoregression methodology. The evidence for Colombia generally shows autonomous output growth and money growth behavior, and...

In this short note we further discuss the role of macroeconomic policies to deal with surges in capital inflows. Primarily policies aimed at avoiding financial crises or an overvaluation of the real exchange rate.

Capital inflows are not an unmitigated blessing for the receiving region or country; in fact, they may pose serious dilemmas for economic policy. Large capital inflows are often associated with money and credit expansion, inflationary pressures, a real exchange rate appreciation, and a...