Exchange Rate Bands and Monetary Policy: The Case of Mexico

Moisés J. Schwartz
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Moisés J. Schwartz: Banco de México. México, D.F. Mexico.

Economía Mexicana NUEVA ÉPOCA, 1994, vol. III, issue 2, 287-317

Abstract: In addition to the well-known policy recommendations of tight fiscal and monetary policies to curb inflation in traditional stabilization programs, the disinflation attempt in Mexico relied on the exchange rate as a nominal anchor. The exchange rate regimen evolved from a publicly announced rate of devaluation of the peso to a fully-fledged exchange rate band. The gradual widening of the band and its asymmetric feature combined a considerable degree of certainty with a greater degree of flexibility. The paper analyses the role played by exchange rate policy in Mexico’s stabilization effort and its monetary policy implications. Special emphasis is given to intra-marginal interventions by the Central Bank.

Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:emc:ecomex:v:3:y:1994:i:2:p:287-317

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