Carlos A. Carrasco

Inflation targeting and inflation expectations in Mexico

In this article we analyse inflation expectations in Mexico. After a review of the theoretical and empirical literature, we apply unit root, normality and cointegration tests to the data provided by Banco de México (Banxico) in the Survey on the Expectations of the Private Sector Economics Specialists. Our results reject the null hypothesis of normality for inflation expectations over the period 2004:01–2011:12. The exchange rate has become one of the most relevant variables in the transmission mechanism of monetary policy in a small open economy. In this regard, we show the existence of a long-run relationship between nominal exchange rate and interest rate where inflation expectations matter for long-term dynamics.

Latin American inflation differentials with USA inflation: does Inflation Targeting make a difference?

The objective of the paper is to analyse whether the use of Inflation Targeting (IT) has had an impact on the process of convergence of inflation rates between Latin American countries and the United States. The analysis is made using non-habitual convergence tests. Some implications arise from our analysis. First, IT countries have lower inflation than countries with different monetary strategies. Second, the disinflationary process has been widespread, taking place in Latin America later than in developed countries. Finally, countries with other monetary policy strategies have also reduced the levels and dispersion of their inflation rates.

The impact of the financial and economic crises on European Union member states

Although the Great Recession is a global phenomenon, with roots outside the European Union (EU), its impact has been deeper and longer lasting in the EU than elsewhere. However, the impact of the Great Recession has not been the same in all the European countries. The objective of this chapter is to analyse the different effects of the economic and financial crisis among the European Union member states, focusing on the behaviour of a number of real and financial variables since the year 2003 to evaluate the impact of the crisis. Thus, we will analyse the performance of 17 economic variables grouped into seven categories: economic activity, labour market, income distribution, inflation, balance of payments, public finances, and financial balance sheets of total economy and sectors.

Inflation targeting in Mexico

In this paper we analyze the effect of the implementation of inflation targeting (IT) in Mexico. The analysis focuses on the inflation convergence process between Mexico and the United States, on inflation expectations in Mexico, and on economic growth rates in the Mexican economy. Our results show that neither the fall in Mexican inflation rates nor inflation convergence with the United States can be attributed (only) to the implementation of IT in Mexico. We do not detect any significant effect on economic growth.

Financial Systems in Financial Crisis – An Analysis of Banking Systems in the EU

The goal of this paper is twofold. First, we describe briefly the French banking sector, presenting its main development since the 1980s and its key characteristics. Second, we analyse the consequences of the financial crisis on the French economy and its banks. In particular, we emphasise the resilience of the French banking model, as no major bankruptcy has occurred in the banking sector since 2008 and private agents have continued to finance their activity without intense credit rationing. However, concerns over the soundness of the French financial system remain unaddressed.

Origen de los desequilibrios macroeconómicos en la economía española

This work studies the origin of macroeconomic imbalances in the Spanish economy in the context of European integration, analyzing some of the major hypotheses found in economic literature as causes of imbalances in current accounts, disparities in competitiveness among member states and the fiscal position of the Spanish government. We emphasize the breaking point of adopting a single currency and how this has affected interest rates, economic growth forecasts and the strong and continuous inflow of capital from countries in the Eurozone core, contributing to the real-estate bubble and leveraging the private sector.