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Manuel Ramos-Francia

Bio: Manuel Ramos-Francia is an academic researcher from Bank of Mexico. The author has contributed to research in topics: Monetary policy & Inflation. The author has an hindex of 15, co-authored 60 publications receiving 913 citations.


Papers
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Journal ArticleDOI
TL;DR: In this article, the authors examined the effect of having an inflation targeting framework on the dispersion of inflation forecasts from professional forecasters and found that the effect is smaller in targeting regimes after controlling for country specific effects, time-specific effects, the level and the variance of inflation, disinflation periods and global inflation.
Abstract: In this paper, we examine the effect of having an inflation targeting framework on the dispersion of inflation forecasts from professional forecasters. We use a panel data set of 25 countries—including 14 inflation targeters—with 16 years of monthly information. We find that the dispersion of long-run inflation expectations is smaller in targeting regimes after controlling for country-specific effects, time-specific effects, the level and the variance of inflation, disinflation periods, and global inflation. On average, the full effect is not observed until the third year after implementation of inflation targeting. When we differentiate between developed and developing countries, the dispersion of inflation expectations after inflation targeting is smaller and statistically significant only in developing countries.

156 citations

Journal ArticleDOI
TL;DR: In this article, the authors studied the time-series properties of both inflation and core inflation during the 1995-2006 period for the Mexican economy, using recently developed techniques to detect a change in the persistence of economic time series.
Abstract: When a central bank commits credibly to a nonaccommodative monetary policy, observed inflation should be a stationary process. In countries where, for a variety of reasons, the determinants of inflation could lead it to follow a nonstationary process, the adoption of a credible disinflationary programme should therefore induce a fundamental change in the stochastic process governing inflation and, in particular, should diminish its persistence. This article studies the time-series properties of both inflation and core inflation during the 1995–2006 period for the Mexican economy, using recently developed techniques to detect a change in the persistence of economic time series. Consistently with the adoption of an inflation-targeting framework, the results suggest that inflation in Mexico seems to have indeed switched from a nonstationary to a stationary process around the end of year 2000 or the beginning of 2001.

95 citations

Journal ArticleDOI
TL;DR: Cecchetti et al. as discussed by the authors studied the evolution of the mean and the persistence of inflation in the 10 largest Latin American economies from 1980 to 2007 and found that the shifts in LAC's inflation are more numerous than in developed countries and that these temporary upturnies tend to occur in a synchronized manner.
Abstract: I. INTRODUCTION In recent times, inflation has been low worldwide, and Latin America is not an exception. In the 10 largest Latin American economies (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay, and Venezuela), consumer price inflation went from a quarterly average of 24% in the 1980s to 15% in the 1990s and to 2% in the first 7 yr of the 2000s. (1) As argued by Rogoff (2003), among others, low world inflation has been most likely the result of a combination of good policies and the effects of globalization. (2) Precisely because of the role of good policies it has been argued that the characterization of the dynamics of inflation can help economists design policies to keep inflation low (e.g., Cecchetti et al., 2007). In particular, knowledge of the empirical properties of inflation has been used to verify the implications of monetary models (e.g., Fuhrer and Moore, 1995; Mankiw and Reis, 2002), to evaluate the impact of monetary policy (e.g., Sargent, 1999), and to select models to forecast inflation (e.g., Stock and Watson, 2007). Two aspects of the dynamics of inflation have recently received attention in developed countries. The first is the changes in the level of inflation. Levin and Piger (2004) document a structural break in the level of inflation for 12 Organisation for Economic Co-operation and Development (OECD) countries during the period 1984-2004, while Corvoisier and Mojon (2005) find breaks in the mean of inflation in every OECD country around 1970, around 1982, and, to a lesser extent, around 1992. As for the level, Cecchetti et al. (2007) document rising inflation in the late 1960s in the majority of the G-7 countries, the "Great Inflation," and falling inflation around the mid-1980s, the "Inflation Stabilization." The second aspect is inflation persistence. Several studies show that inflation persistence seems to be high in the United States (Clark, 2006; Fuhrer and Moore, 1995; Pivetta and Reis, 2007; Stock, 2001), the United Kingdom (Benati, 2005), some OECD countries (Gadea and Mayoral, 2006), and in the euro area (Batini, 2002; O'Reilly and Whelan, 2005). Other studies such as Taylor (2000) and Cogley and Sargent (2005) present evidence that inflation persistence in the United States has fallen recently, although this conclusion has been disputed by Stock (2001) and Pivetta and Reis (2007), who argue that persistence in the United States remains high. Despite the importance of documenting the dynamics of inflation, there has been almost no effort to document them for Latin American countries (LAC). This is surprising for two reasons. First, the analysis of LAC's inflation can be helpful to increase our understanding of the dynamics of inflation in general since LAC have had both more frequent and larger monetary regime switches than developed countries; LAC have experienced low as well as high inflation and monetary regimes that cover, among others, fixed exchange rates, flexible exchange rates, currency boards, money targeting, and inflation targeting (IT). In addition, the region has been hit by diverse shocks to inflation, for instance, oil price shocks, devaluations, balance of payments crises, and financial crises. Second, the lack of availability of studies characterizing the dynamics of inflation in LAC is even more surprising since some of these countries have made public their commitment to keep inflation low, and a necessary condition to achieve this goal seems to be an understanding of inflation dynamics: How has the level of inflation changed through time? Have the changes been synchronized? Is inflation very persistent? Has the persistence changed through time? Our purpose in this article is to document the evolution of the mean and the persistence of inflation in the 10 largest Latin American economies from 1980 to 2007. With respect to the mean, we document that the shifts in LAC's inflation are more numerous than in developed countries and that these shifts tend to occur in a synchronized manner, with inflation increasing throughout the eighties and then decreasing from the beginning of the nineties onward, with a few temporary upturns in some countries. …

83 citations

Journal ArticleDOI
TL;DR: In this paper, the authors provide evidence that production-side links between Mexico and US manufacturing sectors became stronger after NAFTA was enacted and, as a consequence, business cycles in these countries became synchronized.

66 citations

Book ChapterDOI
TL;DR: In this paper, the role of monetary policy in the disinflation process that has taken place in the Mexican economy in recent years is reviewed. And the authors show that, once an economy establishes a sustainable fiscal position, an inflation targeting framework can be seen as an efficient mechanism to impose discipline on monetary policy and thus to reduce inflation.
Abstract: This paper reviews the role of monetary policy in the disinflation process that has taken place in the Mexican economy in recent years. The purpose is to show that, once an economy establishes a sustainable fiscal position, an inflation targeting framework can be seen as an efficient mechanism to impose discipline on monetary policy and, thus, to reduce inflation. This paper describes the measures that were taken after the 1995 crisis to stabilize the economy and that prevented the possibility of a fiscal dominance situation from arising. Consequently, the role of monetary policy in reducing inflation is analyzed, in particular its response to different inflationary shocks. Results show that in conducting the successful disinflationary process, Banco de Mexico’s responses to inflationary shocks have been consistent with inflation targeting principles.

45 citations


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Posted Content
TL;DR: The Arrow-Pratt theory of risk aversion was shown to be isomorphic to the theory of optimal choice under risk in this paper, making possible the application of a large body of knowledge about risk aversion to precautionary saving.
Abstract: The theory of precautionary saving is shown in this paper to be isomorphic to the Arrow-Pratt theory of risk aversion, making possible the application of a large body of knowledge about risk aversion to precautionary saving, and more generally, to the theory of optimal choice under risk In particular, a measure of the strength of precautionary saving motive analogous to the Arrow-Pratt measure of risk aversion is used to establish a number of new propositions about precautionary saving, and to give a new interpretation of the Oreze-Modigliani substitution effect

1,944 citations

01 Mar 1979
TL;DR: In this article, the authors developed the theory behind Krishnaiah and Schuurmann's theoretical work reported in their report Approximations to the Distributions of the Traces of Complex Multivariate Beta and F Matrices.
Abstract: : One use of spectral analysis of time series is to determine if two different time series are realizations from the same process This thesis develops the theory behind Krishnaiah and Schuurmann's theoretical work reported in their report Approximations to the Distributions of the Traces of Complex Multivariate Beta and F Matrices We take the trace of a test statistic calculated from the spectral density matrices of the time series and test it The thesis applies the theory to two small sample simulations (Author)

683 citations

Journal ArticleDOI
TL;DR: In this article, a new approach is proposed to test the full-information rational expectations hypothesis which can identify whether rejections of the null arise from information rigidities, quantifying the economic significance of departures from the null and the underlying degree of information rigidity.
Abstract: We propose a new approach to test the full-information rational expectations hypothesis which can identify whether rejections of the null arise from information rigidities. This approach quantifies the economic significance of departures from the null and the underlying degree of information rigidity. Applying this approach to U.S. and international data of professional forecasters and other agents yields pervasive evidence consistent with the presence of information rigidities. These results therefore provide a set of stylized facts which can be used to calibrate imperfect information models. Finally, we document evidence of state-dependence in the expectations formation process.

588 citations