TY - JOUR
T1 - Has monetary policy been so bad that it is better to get rid of if?
T2 - The case of Mexico
AU - Del Negro, M.
AU - Obiols-Homs, F.
PY - 2001/1/1
Y1 - 2001/1/1
N2 - Motivated by the dollarization debate in Mexico, we estimate an identified vector autoregression for the Mexican economy, using monthly data from 1976 to 1997, taking into account the changes in the monetary policy regime which occurred during this period. We find that (i) exogenous shocks to monetary policy have had no impact on output and prices; (ii) most of the shocks originated in the foreign sector; (iii) disturbances originating in the U.S. economy have been a more important source of fluctuations for Mexico than shocks to oil prices. We also study the endogenous response of domestic monetary policy by means of a counterfactual experiment. The results indicate that the response of monetary policy to foreign shocks played an important part in the 1994 crisis.
AB - Motivated by the dollarization debate in Mexico, we estimate an identified vector autoregression for the Mexican economy, using monthly data from 1976 to 1997, taking into account the changes in the monetary policy regime which occurred during this period. We find that (i) exogenous shocks to monetary policy have had no impact on output and prices; (ii) most of the shocks originated in the foreign sector; (iii) disturbances originating in the U.S. economy have been a more important source of fluctuations for Mexico than shocks to oil prices. We also study the endogenous response of domestic monetary policy by means of a counterfactual experiment. The results indicate that the response of monetary policy to foreign shocks played an important part in the 1994 crisis.
U2 - https://doi.org/10.2307/2673908
DO - https://doi.org/10.2307/2673908
M3 - Article
SN - 0022-2879
VL - 33
SP - 404
EP - 433
JO - Journal of Money, Credit and Banking
JF - Journal of Money, Credit and Banking
IS - 2
ER -