Shifting Nominal Anchors: The Experience of Mexico

In the mid-1980’s Mexico successfully brought down its high rate of inflation by using the exchange rate as nominal anchor in combination with strict fiscal discipline, tight monetary policy, and incomes policy. This paper discusses the role of exchange rate policy as nominal anchor in Mexico and develops the inflation target as the monetary framework for anchoring prices. It also describes how Mexico is applying this frame work while shifting to a more flexible exchange regime and discusses the role of the newly independent central bank and monetary policy in keeping inflation under control while shifting nominal anchors. This paper describes the situations as seen in early 1994, and makes no attempt to describe the events that led to the 1994 crisis and its aftermath.

Empleo rural y combate a la pobreza: una propuesta de política

In 1993 two thirds of the labour force were working in the informal sector, without the benefits of both social security and labor legislation. Three facts will reinforce this: the working population grows at a faster rate than the global population, the participation of women in labor will increase, and the opening of the economy will reduce the demand for rural labor. Even with optimistic expectations of economic growth, and modifications in the labor legislation, the probability that the formal sector can absorb a considerable part of informal workers is low. Governmental programs aimed to develop rural employment can contribute to reduce extreme poverty over the next few years by implementing low salaries programs that induce to self selection in the poor population, and by selecting projects of rural infrastructure which increase labour productivity. The programs should consider seasonality aspects, and focus only on certain regions of the country.

El papel de los derechos de propiedad intelectual en el crecimiento económico

Intellectual property rights are an important element of the new theories of endogenous growth. Because of their special relationship to human capital, intellectual property protection may influence innovative activity and technological progress in critical ways. An important question for many countries is whether stricter enforcement of intellectual property is a good strategy for economic growth. This paper examines the role of intellectual property rights in economic growth, utilizing cross-country data on patent protection, trade regime, and country-specific characteristics. The evidence suggests that intellectual property protection is positively related to economic growth. These effects appear to be slightly stronger in relatively open economies and are robust to both the measure of openness used and to other alternative model specifications.

Comportamiento del tipo de cambio real y desempeño económico en México

An ARCH (Autoregressive Conditional Heteroscedasticity) model is used to obtain the variances over time for the real exchange rata (RER) (peso/dollar) in Mexico. Then a model is constructed to establish the relationship between the RER variability and exports and Mexican GDP, respectively. A negative relationship is found which suggests that not only the level but the stability of the RER is important in explaining economic performance in an open economy. Furthermore, an alternative measure of RER misalignment is developed which, in turn, is shown to be negatively related with economic performance in Mexico. These results suggest that more stable exchange rate regimes should be adopted to create an environment suitable for economic growth.

BID: hacia una economía menos volátil. Progreso económico y social en América Latina, Informe 1995

Los economistas del Banco Interamericano de Desarrollo (BID) nos ofrecen en su informe del año de 1995 –Progreso económico y social en América Latina– un interesante y exhaustivo análisis de la relación entre el crecimiento económico y su volatilidad en la región latinoamericana. En este análisis el BID atribuye a la gran volatilidad tanto de las políticas macroeconómicas como de los términos de intercambio de estos países la causa principal de su relativamente bajo crecimiento económico en las últimas décadas. Si esta volatilidad hubiera sido igual a la de los países industrializados, la tasa de crecimiento económico de la región habría sido un punto porcentual mayor que la registrada. En términos de impacto económico, esta volatilidad supera la de la inversión física y es de magnitud similar a la del capital humano inicial. Estos resultados son en parte similares a los que presentan Ramey y Ramey (1995) quienes, utilizando una metodología distinta y muestras de otros países, encuentran una relación negativa, estadísticamente significativa y aparentemente robusta entre el crecimiento económico y la volatilidad de sus perturbaciones. No obstante lo anterior, el análisis del BID no está libre de problemas conceptuales y la metodología econométrica que utiliza no parece ser muy robusta.

La demanda por crédito hipotecario en un sistema con índices duales

In this paper an explanation is given of the observed interest rate inelasticity for mortgage demand between 1989 and 1993 in Mexico. The Dual Index Mortgages offered many individuals access to credit and the possibility of having their own housing, with relatively small installments. These mortgages allowed greater flexibility in the intertemporal choice of consumption, and hence individuals became indifferent to certain changes in interest rates.