Abstract

LUDLOW WIECHERS, Jorge  and  LEON LEON, Josefina. Effects of monetary policy on prices, production and employment: Mexico, 1986-2005. Inv. Econ [online]. 2008, vol.67, n.266, pp.95-134. ISSN 0185-1667.

The article raises the issue of the origin of the quantitative theory of money and its relationship to the concept of monetary neutrality, as well as the controversy generated around this theory. We carried out an econometric study for the Mexican economy analyzing the relationship between the amount of money and the price level during the period 1986-2005. In addition, following the work of Blanchard and Quah (1989), we explore the effects of currency variations in production and unemployment in order to assess whether monetary policy implemented by the Bank of Mexico has transitory or permanent effects in the economic system.

Keywords : transmission mechanism; VAR model; impulse-response analysis; inflation; unemployment rate.

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