This paper examines empirically the interest rate-exchange rate link in the context of the Mexican experience with a floating exchange regime. The impulse response function derived from an ECM estimated by GMM reveals a lasting positive effect of a currency depreciation on the peso-dollar...

The paper estimates and analyzes an equation for intermediate imports in Mexico during the 1988-2006 post-liberalization period. While some results are obtained from Johansen's VECM model, most of the analysis is carried out within an Error-Correction ARDL framework, following the bounds testing...

Besides its well‐known problem of slow economic growth, Mexico’s recent evolution features both a sharp rise in the import‐intensity of economic activity -- which may have tightened an external constraint on growth -- and a persistent real appreciation of the peso -- which may have created...

This paper examines some aspects of the performance of the floating exchange rate regime adopted in Mexico in December of 1994. In particular, it focuses on the interest rate- exchange rate link and on the relationship between disinflation and the real exchange rate. It shows that both the real...

Based on the so-called bounds testing approach, the paper studies the long-run effect of capital flows and the real exchange rate on Mexico’s private investment from 1988 through 2008, presenting two main results. First, while capital inflows can potentially increase investment, in practice...