Julio A. Santaella

The 1987 Mexican Disinflation Program : An Exchange-Rate-Based Stabilization?

A process and apparatus for forming a laminate by heating an assembly of at least two sheets of glass or vitrocrystalline material with a thermoplastic layer in the intersheet spaces between adjacent sheets. A preliminary treatment of the assembly takes place within an enclosure in which the assembly is heated to soften the thermoplastic layers and in which the heated assembly is exposed to a sub-atmospheric environmental pressure while the intersheet spaces at the peripheral margins of the assembly are subjected to a suction pressure substantially less than that of the sub-atmospheric environmental pressure. At the completion of the preliminary treatment the assembly is conveyed to another enclosure in which the assembly is exposed to higher temperatures than those used in the preliminary treatment so as to firmly bond the sheets by means of the thermoplastic layers.

Four Decades of Fund Arrangements: Macroeconomic Stylized Facts before the Adjustment Programs

This paper analyzes the initial conditions before Fund financial arrangements are adopted. Evidence from 324 Fund arrangements in 78 developing countries during 1973-91 indicates that there are important differences in the characteristics between program episodes and a control group. Program episodes exhibit weaker balance of payments, output growth, investment, external conditions and fiscal policy than the control group; they are also characterized by a higher degree of external indebtedness and inflation, and their exchange rates are more depreciated in both nominal and real terms. Only in the case of the growth rates of money and credit do the two groups appear to be statistically similar.

The exchange rate and the term structure of interest rates in Mexico

Abstract Mexico adopted a floating exchange rate regime in December 1994. The Bank of Mexicos monetary policy gives attention to maintain “orderly conditions in foreign exchange markets.” The Bank of Mexico relies primarily on the control of the overnight interest rate in conducting its monetary policy. The question arises whether this extremely short-term interest rate is the relevant instrument to achieve exchange rate objectives. Theory suggests that the relationship between the exchange rate and the term structure of interest rates can be complicated and counterintuitive when investors are risk averse. In this paper, we pursue an empirical investigation on the effect of the term structure of interest rates on the exchange rate for Mexico. This information could be useful to understand and manage the operation of the Mexican floating exchange rate regime.

Efficiency Wages and Labor Mobility in an Open Economy

The paper analyzes the role of labor market segmentation and relative wage rigidity in the transmission process of macroeconomic shocks in a two-sector optimizing model of a small open economy. The analysis is first conducted in the context of perfect intersectoral labor mobility. The discussion is then extended to consider the existence of short-run constraints on labor movements. The results highlight the role of efficiency considerations in the behavior of sectoral wages. A deflationary policy induces a reallocation of labor across sectors, but has no long-run effect on the unemployment rate.