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Inflation, Monetary Policy and Economic Growth in Mexico. An Inverse Causation, 1970-2009

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DOI: 10.4236/me.2011.25093    7,877 Downloads   11,823 Views   Citations

ABSTRACT

It is demonstrated through an Structural Vector Auto Regression (SVAR) model which distinguishes short and long term effects, that the monetary policy implemented in Mexico (1970-2008) has been successful in reducing inflation at the cost of stagnation, especially after 2002. Inflation Targeting is contradictory in itself because, while it is efficient in improving transparency and credibility of the monetary policy, it does not solve the structural causes of inflation and conversely, increases the financial costs of economic agents.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

E. Loría and J. Ramírez, "Inflation, Monetary Policy and Economic Growth in Mexico. An Inverse Causation, 1970-2009," Modern Economy, Vol. 2 No. 5, 2011, pp. 834-845. doi: 10.4236/me.2011.25093.

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