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Short-Run Price Dynamics in Mexico

  • Thomas M Fullerton Jr

    (University of Texas at El Paso)

  • Roberto Tinajero

    (University of Texas at El Paso)

A theoretical model of inflationary dynamics is developed for Mexico. Estimation is carried out using ARIMA transfer function analysis. Sample data are for the January 1982 - December 1998 period. Overall econometric characteristics of the model satisfy standard statistical criteria. Results indicate that prices in Mexico respond relatively quickly to money supply, interst rate, wage, and peso/dollar currency market changes.

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Paper provided by EconWPA in its series Macroeconomics with number 0407027.

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Length: 17 pages
Date of creation: 21 Jul 2004
Date of revision:
Handle: RePEc:wpa:wuwpma:0407027
Note: Type of Document - doc; pages: 17
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  1. Craig S. Hakkio & Mark Rush, 1990. "Cointegration: how short is the long run?," Research Working Paper 90-08, Federal Reserve Bank of Kansas City.
  2. Andrew J. Filardo, 1998. "New evidence on the output cost of fighting inflation," Economic Review, Federal Reserve Bank of Kansas City, issue Q III.
  3. Fullerton, Thomas Jr., 1993. "Inflationary trends in Colombia," Journal of Policy Modeling, Elsevier, vol. 15(4), pages 463-468, August.
  4. Santiago Herrera, 1985. "Comentarios sobre las relaciones de causalidad entre tasa de cambio y precios," Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 4(8), pages 131-132, Diciembre.
  5. Lars E. O. Svensson, 2000. "Open-Economy Inflation Targeting," NBER Working Papers 6545, National Bureau of Economic Research, Inc.
  6. Thomas M Fullerton Jr & Cuauhtemoc Calderon, 2004. "Inflationary Pressure Determinants in Mexico," Macroeconomics 0407030, EconWPA.
  7. Engsted, Tom, 1993. "Cointegration and Cagan's Model of Hyperinflation under Rational Expectations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(3), pages 350-60, August.
  8. Leiderman, Leonardo, 1984. "On the monetary-macro dynamics of Colombia and Mexico," Journal of Development Economics, Elsevier, vol. 14(1), pages 183-201.
  9. Santiago Herrera, 1985. "Comentarios sobre las relaciones de causalidad entre tasa de cambio y precios," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, December.
  10. Ben S. Bernanke & Frederic S. Mishkin, 1997. "Inflation Targeting: A New Framework for Monetary Policy?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 97-116, Spring.
  11. Thomas M Fullerton Jr & Richard A Hirth & Mark B Smith, 2004. "Inflationary Dynamics and the Angell-Johnson Proposals," Macroeconomics 0409009, EconWPA.
  12. Thomas M Fullerton Jr & Eiichi Araki, 2004. "New Directions in Latin American Macroeconometrics," Development and Comp Systems 0408002, EconWPA.
  13. Rolnick, Arthur J & Weber, Warren E, 1997. "Money, Inflation, and Output under Fiat and Commodity Standards," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1308-21, December.
  14. Sheehey, Edmund J., 1980. "Money, income and prices in Latin America : An empirical note," Journal of Development Economics, Elsevier, vol. 7(3), pages 345-357, September.
  15. Thomas M Fullerton Jr, 2004. "A Theoretical Model of Developing Country Inflationary Dynamics," Macroeconomics 0407031, EconWPA.
  16. Allan Meltzer, 1998. "Monetarism: The issues and the outcome," Atlantic Economic Journal, International Atlantic Economic Society, vol. 26(1), pages 8-31, March.
  17. Kamas, Linda, 1995. "Monetary policy and inflation under the crawling peg: Some evidence from VARs for Colombia," Journal of Development Economics, Elsevier, vol. 46(1), pages 145-161, February.
  18. Gerald P. Dwyer, Jr. & R.W. Hafer, 1999. "Are money growth and inflation still related?," Economic Review, Federal Reserve Bank of Atlanta, issue Q2, pages 32-43.
  19. Hanson, James A., 1985. "Inflation and imported input prices in some inflationary Latin American economies," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 395-410, August.
  20. Li, C.A. & Philippopoulos, A. & Tzavalis, E., 1998. "Inflation and Exchange Rate Regimes in Mexico," Discussion Papers 9801, Exeter University, Department of Economics.
  21. John Elder & Peter E. Kennedy, 2001. "Testing for Unit Roots: What Should Students Be Taught?," The Journal of Economic Education, Taylor & Francis Journals, vol. 32(2), pages 137-146, January.
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