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Central Bank Policies in Mexico: Targets, Instruments, and Performance

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  • Jaime Ros

    (UNAM, Posgrado de Economía, Zona cultural, Ciudad Universitaria, Mexico City, Mexico)

Abstract

The central argument of this paper is that in pursuing low inflation as its single and exclusive goal, and given some characteristics of the Mexican economy – a large degree of trade openness, a relatively high pass through of exchange rate movements into prices, and a low direct sensitivity of aggregate demand to interest rates – monetary policy has generated a recurrent tendency toward real exchange rate appreciation with very adverse effects on economic growth. The paper also examines central bank’s intervention in the foreign exchange market and the effectiveness of sterilized intervention in affecting the real exchange rate and potentially overcoming the tendency to real appreciation.

Suggested Citation

  • Jaime Ros, 2015. "Central Bank Policies in Mexico: Targets, Instruments, and Performance," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 57(3), pages 483-510, September.
    • Handle: RePEc:pal:compes:v:57:y:2015:i:3:p:483-510
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    Cited by:

    1. Libman, Emiliano, 2017. "Asymmetric Monetary and Exchange Rate Policies in Latin America," MPRA Paper 78864, University Library of Munich, Germany.
    2. Ruch,Franz Ulrich, 2021. "Neutral Real Interest Rates in Inflation Targeting Emerging and Developing Economies," Policy Research Working Paper Series 9711, The World Bank.
    3. Libman, Emiliano, 2018. "Asymmetric monetary and exchange-rate policies in Latin American countries that use inflation targeting," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.

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