Exchange rate regime, world oil prices, and the Mexican economy
Author
Berument, M. Hakan
Advisor
Çetinkaya, Merve
Date
2020-06Publisher
Bilkent University
Language
English
Type
ThesisItem Usage Stats
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Abstract
This thesis studies the effects of the exchange rate regime of the Mexican economy
on how the oil price shocks affect the domestic economic performance by
considering the period from January 1992 to December 2019. The empirical
evidence reported here reveals that a positive oil price shock appreciates the local
currency, increases the interest rate, output, and prices. Furthermore, once the
exchange rate channel is closed, an increase in the interest rate and prices will be
higher. However, we could not find statistically significant evidence that the effect
on output does change with the exchange rate regime. This conclusion is parallel of a
country that has a low level of inflation commitment.
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