La enfermedad mexicana y los dilemas de la política económica
We analyze some of the effects of the peso’s real appreciation on the output-inflation policy dilemma. Thanks to the appreciation, it is possible to achieve simultaneously a higher real wage and a lower inflation rate without need of output loss. After the capital inflows that support the appreciation stop, though, the policy dilemma is stronger than initially, because of a rise in the country’s stock of foreign debt. We discuss the difficulties involved in trying to offset this effect through variations in the domestic interest rate and show that the positive influence from an improvement in inflation expectations is transitory. In contrast, higher levels of labor productivity tend to improve the inflation-unemployment trade-off permanently.
Volume (Year): IX (2000)
Issue (Month): 1 (January-June)
|Contact details of provider:|
When requesting a correction, please mention this item's handle: RePEc:emc:ecomex:v:9:y:2000:i:1:p:5-21. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ricardo Tiscareño)
If references are entirely missing, you can add them using this form.