José Sidaoui

Bio: José Sidaoui is an academic researcher from Bank of Mexico. The author has contributed to research in topics: Debt & Monetary policy. The author has an hindex of 10, co-authored 23 publications receiving 231 citations.

The global financial crisis and policy response in Mexico

Abstract: The intensification of the global financial crisis, especially as of September 2008, had a significant negative effect on Mexico, which faced two shocks of considerable magnitude. First, the global economic recession, particularly that of the United States, led to a drop in Mexico’s exports and a deterioration in its terms of trade. Second, the climate of extreme risk aversion among international investors and the global deleveraging process significantly constrained access to international financial markets.

The Mexican financial system: reforms and evolution 1995-2005

Abstract: The Mexican banking crisis of 1995 contained many of the same characteristics as other banking crises: a massive expansion of credit in a short period of time, poor bank management, supervisory and regulatory loopholes, and a shock (both domestic and external). The perverse incentives created by a quasi-fixed exchange rate regime contributed to the onset of the crisis. However, the weakness of the financial system and loopholes within the regulatory and supervisory frameworks exacerbated its aftermath. The experience has provided important policy lessons. We divide the different factors that triggered the crisis and were responsible for its severity into the following categories: the macroeconomic environment, the incentives’ structure faced by economic agents, and the legal and regulatory framework.

Central banking intervention under a floating exchange rate regime: ten years of Mexican experience

Abstract: From December 1994 to date, the Mexican peso/US dollar rate has been determined by market forces under a floating regime. During this time span the exchange rate has suffered severe shocks, coming both from the domestic economy (the 1995 crisis) and from the rest of the world (Asian, Russian and Brazilian crises, 11 September 2001 and the Iraqi war). The flexibility of the exchange rate has helped to soften the effects of these shocks. However, the main support of the exchange rate stems from the perceived soundness of Mexico’s macroeconomic fundamentals and from the financial authorities’ commitment to avoid discretionary interventions. In this regard, as will be shown in this document, in implementing foreign exchange policy Banco de Mexico has adhered to two main principles: (1) not to interfere with the normal functioning of the market and (2) to foster the development of the market through the creation of new instruments and by encouraging the entrance of new participants.

Central banking intervention under a floating exchange rate regime: ten years of Mexican experience

Abstract: From December 1994 to date, the Mexican peso/US dollar rate has been determined by market forces under a floating regime. During this time span the exchange rate has suffered severe shocks, coming both from the domestic economy (the 1995 crisis) and from the rest of the world (Asian, Russian and Brazilian crises, 11 September 2001 and the Iraqi war). The flexibility of the exchange rate has helped to soften the effects of these shocks. However, the main support of the exchange rate stems from the perceived soundness of Mexico’s macroeconomic fundamentals and from the financial authorities’ commitment to avoid discretionary interventions. In this regard, as will be shown in this document, in implementing foreign exchange policy Banco de Mexico has adhered to two main principles: (1) not to interfere with the normal functioning of the market and (2) to foster the development of the market through the creation of new instruments and by encouraging the entrance of new participants.

Where Is the Impact

Abstract: To the Editor: As an advocate for patient safety and for the introduction of appropriate monitoring technology into perioperative practice, I read the recent article by Taenzer et al. with anticipation. Unfortunately, the conclusions reached by the authors do not appear to be supported by the evidence provided in the article. Specifically, the authors conclude “our results demonstrate that continuous patient surveillance can improve outcomes in a postoperative orthopedic ward setting.” There was no meaningful difference in death, intensive care unit transfer, or hospital stay; the only reported difference was in the number of “rescue” events. The rescue events consisted of several levels of intervention ranging from conventional code blue teams to a bedside visit of an intensive care nurse and a respiratory care technician within 10 min of call. Surely, the “rescues” at the latter end of the range cannot be considered significant clinical or resource utilization outcomes as described within. Although the authors note that the types of rescues activated were collected, the actual distribution by type of event before and after surveillance was not provided in the article. This article does break with tradition in a positive way in that it studies the impact of SpO2 surveillance in a clinical area where, by routine practice, patients are only assessed intermittently and where hypoxic events are not rare. In the past, the value of pulse oximetry was assessed in areas where intensive monitoring was already the rule. One cannot help but be a bit confounded by the results of this study because important data are absent. At its heart, the authors claim that surveillance reduces interventions, but how is this possible? A priori, more monitoring should detect more true hypoxia, which in turn should lead to more interventions (at an earlier stage, perhaps), not fewer, in order to improve true clinical outcomes. Are there important patient care interventions that are excluded from reporting in this article, such as direct nursing care and calls to and action by responsible physicians, among others? No mention is made of what process a floor nurse was to follow, protocol-driven or ad hoc, once notified by the central paging system. Did the frequency of nurse intervention in adjusting a patient’s posture or supplemental oxygen delivery, among other actions, change with surveillance? Finally, one is left curious about the impact of more intense respiratory monitoring on postoperative management and patient satisfaction because these are not addressed in the article. We look forward to further research using this model once adequately powered to discern clinically relevant outcomes. Ira J. Rampil, M.S., M.D.,* Linda S. Rampil, M.S., M.S.W., R.N. *Health Science Center, Stony Brook University, Stony Brook, New York. ira.rampil@sunysb.edu

Monetary Policy Rules in Emerging Market Economies: Issues and Evidence

Abstract: The paper reviews the recent conduct of monetary policy and the central banks’ interest rate setting behaviour in emerging market economies. Using a standard open economy reaction function, we test whether central banks in emerging market economies react to changes in inflation, output gap, and the exchange rate in a consistent and predictable manner. In most emerging market economies, the interest rate responds strongly to the exchange rate; in some, the response is higher than that to changes in the inflation rate or the output gap. The result is robust to alternative specification and estimation methods. This highlights the importance of the exchange rate as a source of shock and supports the “fear of floating” hypothesis. Evidence also suggests that in some countries the central bank’s response to a negative inflation shock might be weaker than to a positive shock.

Emerging Market Local Currency Bonds: Diversification and Stability

Abstract: Over the past three years, cross-border inflows into emerging market (EM) local currency bonds have surged. The returns on these bonds have moved more closely with those on international assets regarded as "safe", particularly following the euro area debt crisis. This paper first demonstrates that domestic factors have tended to dictate the dynamics of the EM local currency government yield. The importance of local drivers has probably increased the potential diversification benefit, creating strong appetite for the asset class. Second, the paper confirms that EM local currency government yields have behaved more like safe haven yields since 2008: they have dropped, rather than increased, in response to worsening global risk sentiment. Yet EM local currency government yields could be susceptible to adverse external shocks: the yield dynamics have been affected by unsustainably low US Treasury yields. Moreover, the international role of EM local currency bonds depends crucially on the behaviour of exchange rates. Nevertheless, the further development of local currency bond markets should help strengthen the stability of the international monetary and financial system.

Foreign Exchange Intervention: A Shield Against Appreciation Winds?

Abstract: This paper examines foreign exchange intervention practices and their effectiveness using a new qualitative and quantitative database for a panel of 15 economies covering 2004-10 with special focus on Latin America. Qualitatively, it examines institutional aspects such as declared motives, instruments employed, the use of rules versus discretion, and the degree of transparency. Quantitatively, it assesses the effectiveness of sterilized interventions in influencing the exchange rate using a two-stage IV-panel data approach to overcome endogeneity bias. Results suggest that interventions slow the pace of appreciation, but the effects decrease rapidly with the degree of capital account openness. At the same time, interventions are more effective in the context of already ‘overvalued’ exchange rates.