Public debt and deficit in Mexico: A comment

This comment shows that the Mexican intertemporal budget balance was maintained for the period 1981 to 1988. This result contrasts with the one obtained by Feliz and Torres (1991).

Public debts and deficits in Mexico: a comment

Mexico ; Debt

The costs and benefits of fixed dollar exchange rates in Latin America

Chronic inflation and the importance of the exchange rate as a nominal anchor for the domestic price level have led some Latin American countries to consider returning to a fixed dollar exchange rate. John Welch and Darryl McLeod examine the costs and benefits of real exchange rate movements and their relevance for the credibility of inflation policies in countries now contemplating free trade agreements with the United States. ; The authors discuss the experiences of several Latin American countries and describe the problem their policy-makers face when deciding to follow either fixed or flexible exchange rate rules. Fixed exchange rates that are credible can decrease inflation rates, but only at the cost of policy flexibility in the face of adverse changes in the terms of trade or foreign interest rates. The current relative stability of international markets has led some Latin American countries to complement their stabilization and reform policies with fixed exchange rates.Foreign exchange - Law and legislation ; Latin America

Exchange rate uncertainty and economic growth in Latin America

Latin America

Understanding Latin American currency pegs to the dollar

Latin America ; Dollar, American

Interpreting central bank independence in Mexico

Banks and banking, Central ; Mexico

Banking and currency crisis recovery: Brazil's turnaround of 1999

Of the many countries that suffered exchange rate crises in the 1990s, Brazil and Korea recovered most rapidly. This article analyzes the Brazilian recovery. William Gruben and John Welch focus on the freedom that Brazilian bank health gave to the central bank to pursue a postcrisis monetary policy that would settle markets, reestablish price stability, and encourage investment and the return of foreign capital. Brazilian bank health was not an accident; it reflected not only bank responses to precrisis changes in government regulations, but also to large precrisis interest rate increases associated in part with Brazil's efforts to defend its currency.Banks and banking - Brazil

The credibility and performance of unilateral target zones: a comparison of the Mexican and Chilean cases

Foreign exchange rates ; Mexico ; Latin America

Is NAFTA economic integration?

Most economists agree that trade liberalization raises incomes and living standards. To achieve trade liberalization, though, countries must sometimes first reach trade agreements. And trade agreements, as William Gruben and John Welch observe, may intertwine elements of both liberalization and protectionism. As an example, Gruben and Welch examine the negotiation process that preceded passage of the North American Free Trade Agreement. ; Is NAFTA economic integration? Although some authors think so, Gruben and Welch believe that interpreting NAFTA purely as economic integration is misleading. A more useful way to interpret NAFTA, they claim, is to start by recognizing it as the latest synthesis of an ongoing conflict between those who support trade liberalization and those who want trade protectionism. NAFTA offers broad-based trade openings, but it still contains restrictively protectionist components. In considering the efforts of trade liberalization advocates and trade protectionists, the authors also attempt to show how members of these pressure groups form alliances, disguise their efforts, and otherwise attempt to achieve their goals.North American Free Trade Agreement

Is tighter fiscal policy expansionary under fiscal dominance? Hypercrowding out in Latin America

We test for hypercrowding out as a signal of market concerns over fiscal dominance in five Latin American countries. Hypercrowding out occurs when fiscally dominated governments’ domestic credit demands are perceived as so intrusive to a nation’s financial system that a move towards fiscal surplus lowers interest rates and increases growth. We sample five Latin American countries to test for these relationships. Judged by the results of vector error correction models, three nations test clearly positive, suggesting market concern despite their recent efforts towards fiscal balance.