IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Preemptive policy strikes and bond price stability: A Study on the Credibility of the Monetary Policy in Mexico under Inflation Targets

Listed author(s):
  • Alfonso Mendoza V.

From the aftermath of the crisis of 1995, monetary authorities in Mexico have employed a preemptive monetary policy mechanism known as the 'short' to affect interest rates in the first instance and then, in the medium and long term, to control inflation expectations. By using an Exponential- GARCH framework, this document examines the effect of the 'short' on the stability of the term structure under Money growth Targets (MT) and Inflation Targeting (IT). Long-bond rates signal the course in which short interest rates ought to go and contain information about the persistence and direction of inflation expectations. When these expectations surpass the official target, the credibility of the Banco de México to achieve such target is at peril. The findings of this research are twofold, first, the introduction of IT indeed enhances the credibility of the monetary framework and, second, the preemptive changes in the monetary policy ('short' variations) under this framework are considered not transparent and inconsistent.

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Article provided by IUP Publications in its journal The IUP Journal of Applied Economics.

Volume (Year): IV (2005)
Issue (Month): 2 (March)
Pages: 55-79

in new window

Handle: RePEc:icf:icfjae:v:01:y:2005:i:2:p:55-79
Contact details of provider:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:icf:icfjae:v:01:y:2005:i:2:p:55-79. 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: (G R K Murty)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.