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The Mexican Interest Rate Pass-Through in the Post-U.S. Subprime Mortgage Crisis Era

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  • Chu V. Nguyen

Abstract

This study investigates the nature of the Mexican interest rate pass-through during the post-U.S. subprime mortgage crisis. The empirical results reveal a very high short-run and an almost complete long-run interest rate pass-through. The bounds test indicates a long-term relationship between countercyclical monetary policy and market rates. Notwithstanding the rigid inflation targeting set by the Mexican Central Bank in the very concentrated Mexican market and its openness to foreign competition, the Mexican open economy is very small compared to the U.S. economy. Despite these conditions, the Mexican Central Bank has been very effective in conducting its countercyclical monetary policy.

Suggested Citation

  • Chu V. Nguyen, 2018. "The Mexican Interest Rate Pass-Through in the Post-U.S. Subprime Mortgage Crisis Era," The International Trade Journal, Taylor & Francis Journals, vol. 32(1), pages 100-115, January.
    • Handle: RePEc:taf:uitjxx:v:32:y:2018:i:1:p:100-115
    DOI: 10.1080/08853908.2017.1360226
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    Cited by:

    1. Bo Gao, 2022. "The Use of Machine Learning Combined with Data Mining Technology in Financial Risk Prevention," Computational Economics, Springer;Society for Computational Economics, vol. 59(4), pages 1385-1405, April.

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