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Commercial banks and currency kiosk bureaus provide exchange services throughout Ciudad Juarez. This study employs newspaper data to examine how the bank and kiosk sell-buy spreads are affected by border crossings, the bilateral peso per dollar exchange rate, and 90-day Mexico – U.S. treasury yield differentials. Sample data are from January 2009 through June 2016. Parameter estimation is carried out using a GLS ARMAX procedure. Empirical results indicate that bank spreads increase as the peso weakens. Exchange bureau spreads decrease as cross-border traffic flows increase. Currency kiosk spreads tend to widen as 90-day yield gaps become larger. [ABSTRACT FROM AUTHOR]

Exchange rate volatility, growing foreign corporate debt, and decreasing private investment ratio are among the consequences of financialization experienced by developing countries such as Mexico. The present work analyses the combined effect of these three factors using a Stock Flow Consistent (SFC) model. It analytically explores the balance sheet effect in the non-financial corporate sector; higher foreign debt would affect private investment after episodes of real currency depreciation. To explore such mechanisms, we simulate the commodity price cycle of the early 2000s alongside the shifts in the stance of the FED in the aftermath of the Global Financial Crisis. The scenario analysis points to a hysteresis of the Real Exchange Rate (RER) and an increase in foreign debt level. [ABSTRACT FROM AUTHOR]

This paper argues that the null or weak response of emerging market currencies to domestic monetary policy documented in the literature is the result of wide event windows. An event study with intraday data for Mexico shows that an unanticipated tightening appreciates the currency and flattens the yield curve, consistent with the evidence for advanced economies. With daily event windows, however, only the yield curve responds to monetary policy. Noise in daily exchange rate returns explains the lack of response of the currency. Such noise gives rise to a bias that declines after controlling for potential omitted variables. [ABSTRACT FROM AUTHOR]

This article aims to estimate and analyze the value-added chains embedded in the bilateral-sectoral trade of intermediate and final goods included in the transactions: Texas-Mexico (TX-MX) and California-Mexico (CA-MX). For this purpose, the global interregional input-output matrices for TX-MX and CA-MX were constructed for 2013. The bilateral-sectoral trade balance shows that Texas (TX) and California (CA) specialize in exports of intermediate goods. In contrast, Mexico (MX) specializes in final goods, resulting in low export multipliers for the latter. MX maintains high dependence on intermediate goods from TX, CA, and third places, resulting in lower foreign exchange earnings per dollar exported. Finally, TX-MX has an energy-technology trade pattern, while CA-MX has a technology-energy trade pattern. [ABSTRACT FROM AUTHOR]

Purpose: The literature mostly investigates the impact of trade and financial integration on business cycle synchronization. The author differs by focusing on the real effective exchange rate as the target variable in the North American Free Trade Agreement (NAFTA) region. In particular, the author investigates synchronization by analyzing the short- and long-run dynamics of the real effective exchange rates of Canada, Mexico and the US for 2008–2019. Design/methodology/approach: The author first employs stationarity and cointegration tests to specify and estimate the long-run equilibrium relation between the real effective exchange rates of Canada, Mexico and the US. The author then specifies and estimates an error-correction model for each real effective exchange rate in order to investigate whether the adjustment in eliminating disequilibrium is asymmetric. Findings: The results indicate that the real effective exchange rates of Canada, Mexico and the US are cointegrated with only one long-run equilibrium relation. Canada's real effective exchange rate responds symmetrically to eliminate both negative and positive disequilibrium with a similar speed of adjustment. However, the response of Mexico's real effective exchange rate is asymmetric, as it responds to eliminate only positive disequilibrium. The US real effective exchange rate does not respond to disequilibrium, perhaps because it has a large economy with much stronger competition beyond the NAFTA region than both Canada and Mexico. Originality/value: This is the first study that investigates real effective exchange rate synchronization in the NAFTA region. [ABSTRACT FROM AUTHOR]

This paper examines the effects of foreign exchange (FX) communications on FX markets in Colombia and Mexico. Our estimations follow the calendar-time portfolio approach using daily data between 2000 and 2019 on exchange rates and known risk factors. We find an asymmetric effect of such communications: while there is strong evidence indicating that communications aimed at weakening the local currency affect the exchange rate level in the intended direction, there is no evidence of impact when examining communications intended to strengthen it. These results are consistent with fear of appreciation and with previous evidence from developed economies. • Monetary authorities use foreign exchange communications (FXC) to influence the exchange rate. • FXC in Colombia and Mexico are evaluated during the 2001-2019 period. • The calendar-time portfolio approach is used to evaluate FXC in both countries. • FXC aimed at weakening the domestic currency affect the exchange rate, while those intended to strength it have no impact. • Results are consistent with fear of appreciation and previous evidence from advanced economies. [ABSTRACT FROM AUTHOR]

Starting with an outline of the origin, relevance of money and performance of central banking, a critical analysis is prepared to help provide arguments on the feasibility and impact of changes in the regulations governing central banking functions. A second section describes the current tasks and functions of the central bank in Mexico with emphasis on those related to the functioning of the exchange market and the management of international reserves, which also implies the current restrictions on the use of foreign currency and its exchange for domestic currency in the country. It then explains the arguments related to the current management of foreign exchange by the central bank, as well as other operators in the exchange market, and finally analyses the possible impacts of reforming the Bank of Mexico Law on the economy and the exchange market. [ABSTRACT FROM AUTHOR]

Copyright of Mexican Journal of Economics & Finance / Revista Mexicana de Economia y Finanzas is the property of Instituto Mexicano de Ejecutivos de Finanzas and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This article sets out to illustrate the configuration of the global export network; that is, countries' respective importance in the trade network of export production. This network has become denser due to the international fragmentation of production. This article illustrates the configuration of total and manufacturing exports, according to their technological level and those that process natural resources. The most notable changes in the composition of the core network during the study period are the rise of China to a position of prominence; the growing importance of Korea; and the loss of importance of Japan, France, Great Britain, and Italy. On the other hand, the United States and Germany continue to maintain their presence as central players. [ABSTRACT FROM AUTHOR]

The Automotive Sector is one of the most important worldwide, in recent years it has had an important relevance for its high contribution in the economic development of Mexico, it is also the first generator of foreign exchange, it is an important generator of direct jobs, and it is the main recipient of foreign direct investment. It is observed that Mexico is among the most prominent countries in the production and export of automobiles; therefore it becomes the seventh largest producer and fourth largest exporter of automobiles worldwide. The main objective was to find the positive relationship between the variables infrastructure, investment, exchange rate and human capital with exports of the automotive sector in Mexico for the period 1993-2017. The causality study is also carried out by applying the Granger causality test (1969), in order to study whether there is a causal relationship between the variables. As a result of the causality tests, it was found that there is a two-way causality relationship of the exchange rate towards exports of the automotive sector. [ABSTRACT FROM AUTHOR]

Price risk management for corn production has a support price component; however, this is not universal and the operating rules themselves indicate that producers having over 20 ha are not eligible. This reveals part of the national corn production that has yet to manage price risk. A price risk management tool is a derivative market, which is non-existent in Mexico. An alternative is to manage this risk in a foreign futures market, which requires setting a price in a foreign currency under the conditions of that foreign market. For such hedge to be potentially efficient, the necessity of a stable relationship between domestic prices, future foreign prices and the exchange rate is essential; using a vector time series approach, the assessed hypothesis includes a cointegrating vector between the domestic price, future price and exchange rate variables, and therefore shows an effective risk management of the domestic price of corn (Zea mays L.) from the future corn price quoted in Chicago. Results show that the existence of a long-term relationship between the domestic and future prices of corn with the exchange rate mediation cannot be rejected. This implies the existence of a hedging potential, despite a foreign future price and the peso-dollar exchange rate itself. [ABSTRACT FROM AUTHOR]

The article focuses on the currency substitution of demand deposits in Mexico. The article explains that "dollarization" is defined as the degree to which real and financial transactions are performed in dollars relative to those realized in domestic currency. The author states that previous studies suggest that monetary policy will become useless in a country where foreign currencies are used as substitutes for domestic currency. The article also discusses dollarization from a historical perspective and the causes and effects of the dollarization of demand deposits.

Recent literature has empirically demonstrated that the real exchange rate is essential to explaining the economic evolution of developing countries. It has been empirically proven that the anti-inflation exchange rate policy implemented systematically in Mexico has constituted a major restriction on the country's economic growth, a restriction that has persisted throughout this entire time period, even through different monetary and exchange rate regimes. This paper estimates an svar (1950-2014) that shows how the continuous appreciation of the real exchange rate has curbed Mexico's economic growth capacity and had an impact on other macroeconomic balances. This alone could be considered a highly potent structural macroeconomic reform. [ABSTRACT FROM AUTHOR]

A Markov regime-switching model is applied to the time series of the Mexican Peso-U.S. Dollar exchange rate and to the Mexican interest rate. The existence of two states is statistically significant in both cases. The exchange rate is characterized by extended periods of low variance and slight appreciations followed by short-lived high variance and depreciation states. The interest rate is characterized by a long run decrease in interest rates that can be decomposed in two periods: one with high rates and increased volatility before 2004 and another with low rates and decreased volatility after that year. It was found that the states of these time series are in sync 44.9% of the time due mainly to the persistence of the states rather than due to the correlation between the high volatility-depreciation state in exchange rates and the high volatility state in interest rates. [ABSTRACT FROM AUTHOR]

Copyright of Investigación Económica is the property of Universidad Nacional Autonoma de Mexico, Facultad de Economia and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The recent globalization of tourism has connected international consumer and local artisan directly and more intensively. As foreign buyer and artisan seller interact, a variety of payment options and mechanisms may be considered, including cash transfers in the buyer's home currency. In this article, we report the findings of a June 2012 survey (n = 97) of U.S. dollar acceptance within inland artisanal markets in Guadalajara, Mexico. Even though the Mexican regulatory environment for U.S. dollar usage in Mexico has thickened since 2010, we find that a majority of Mexican firms located in traditional artisanal zones in the Guadalajara metropolitan area willingly accept the U.S. dollar in retail transactions. These small-scale artisanal enterprises accept U.S. dollars in payment, on occasion substituting the U.S. dollar in place of the local Mexican peso for transactions, because U.S. dollar acceptance drives higher sales volumes and the opportunity to earn a premium on the currency exchange. We find that the determinants of Mexican firm-level U.S. dollar acceptance include business maturity, higher levels of foreign patronage, and focused artisanal production. [ABSTRACT FROM AUTHOR]

This article will discuss the impact of remittances from the United States on low-income families in Mexico and how the loss of remittances via the death of the immigrant can create unforeseen financial problems. First, the article will give some background information about migration flows from Mexico to the United States as well as the consequent remittance flows. This section will also give a general overview of the impact that remittances have on poor households and will describe the current demand for financial services from Mexican immigrants in the United States. Second, the article outlines a potential micro-insurance plan that would help Mexican immigrants in the United States cope with the shock of repatriating remains and income loss. A micro-insurance plan would not only attend to the immigrant's desire to access financial services that meet their needs, but would also allow families to recover from loss of income more easily if the immigrant dies while abroad. [ABSTRACT FROM AUTHOR]

We use a previously unexploited data set to calculate the real exchange rate with respect to the U.S. dollar for Mexico for 1930.01-1960.12, and to test for purchasing power parity (PPP). The initial results from the Augmented Dickey-Fuller (ADF) test show weak support for the PPP hypothesis. The Kapetanios, Shin, and Snell test, for a unit root null with an alternative of nonlinear reversion to the mean, indicates substantial support for PPP. However, non-normality and, sometimes, heteroscedasticity are found in the test residuals. Using a wild bootstrap approach, critical values are calculated from the empirical distribution of the residuals. Reevaluating the test statistics with the new critical values, we conclude that there is evidence of nonlinear adjustment to PPP for 1930.01-1951.12 but there is no evidence that PPP held for 1952.01-1960.12, the period of import substitution in Mexico. [ABSTRACT FROM AUTHOR]

Copyright of Polis (07176554) is the property of Polis - Revista Academica Universidad Bolivariana and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Purchasing power parity has been the subject of many empirical studies. Much of this work has focused on recent history in developed countries. This article reports results of tests for nonlinear, mean reversion of the real exchange rate for a less-developed country, Mexico, using a previously unexploited data set of monthly observations for 1930-1960. The test results provide limited support for Purchasing Power Parity (PPP). [ABSTRACT FROM AUTHOR]

El artículo presenta un análisis sobre los factores que determinan la evolución del tipo de cambio en los países. Se destaca la hipótesis sobre la paridad de poder de compra y la paridad descubierta de tasas de interés, las cuales presentan un papel fundamental para identificar los actores que influyen en el tipo de cambio, con respecto al mercado en México.

This paper examines whether the theory of purchasing power parity (PPP) existed between Mexico and India for the period 1886-1910. It finds that despite not having a known trade relationship, PPP did hold. The explanation lies in the fact that these very different countries adhered to the silver standard far longer than most others - India through to 1893 and Mexico until 1905. The economic consequences of this adherence exposed both countries to similar international currency fluctuations that also provoked similar policy reactions within each country. [ABSTRACT FROM AUTHOR]

Copyright of TURyDES is the property of TURYDES and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Abstract: In the past decade, the maquiladora export industry surpassed both tourism and petroleum products to become the number one source of earned foreign exchange for Mexico. The continued growth of the maquila industry suggests that there may be significant production spillovers into the local environments. Dynamic modeling, using STELLA, provides a framework for quantifying the environmental impacts emanating from the growth of the maquila industry, focusing on wastewater treatment consequences and resulting infrastructural policy considerations. Such detailed modeling of industrial, infrastructural, and ecological linkages has not yet been a feature of research on this region, despite the potential for significant human health ramifications. An environmental model is therefore developed for two focal urban communities, Nogales and Mexicali, facing potential wastewater treatment concerns due to the growth of nearby maquila factories. In the former case, the analysis revealed the inadequacy of the capacity planning for the treatment of effluent; in the latter case, conservative projections reveal that the system upgrades should be able to handle demands through 2020. [Copyright &y& Elsevier]

This article presents three different unit root tests for panel data, the main objective is to find the level of internal integration market through the purchasing power parity (PPP) evidence, based in the Balassa-Samuelson approach. Thus, eight kinds of markets, as tradable and nontradable goods for 16 main Mexican cities during a 21 year period have been contrasted. While two tests showed the PPP validity for seven markets, the other rejected it. The results obtained moreover feed the present controversy about which test is most appropriate to test the PPP, as soon as it is highlighted new elements emerge to explain the half-life analysis. [ABSTRACT FROM AUTHOR]

Following the approach suggested by Engel and Kim (1999), we estimate the permanent and transitory components of the real exchange rates in four Latin-American countries for the period 1957:01 to 2002:04. Results suggest that transitory component is the driving force of the real exchange rates in Argentina and Mexico. A principal role of the permanent component is observed in the real exchange rates of Brazil and Chile. Estimates probabilities of the high-variance regime allow to identify the principal events happened in these countries. This information is closely related to nominal shocks and therefore, it explains the significant role of this component in these countries. [ABSTRACT FROM AUTHOR]

The Nuevo Laredo maquiladora sector has grown enormously during the last two decades. The short-term time series characteristics of this portion of the regional economy are analyzed in an attempt to quantify the trends underlying this remarkable performance. Parameter estimation is accomplished via linear transfer function (LTF) analysis. Data are drawn from the January 1990–December 2000 sample period. Empirical results indicate that real wage rates, maquiladora plants, U.S. industrial activity, and the real exchange rate of the peso play significant roles in determining month-to-month fluctuations in maquiladora employment. Furthermore, sub-sample forecast simulation exercises are conducted as an additional means for verifying model reliability. Empirical results indicate that the forecasts generated with the LTF model are less accurate than those associated with a simple random walk procedure for twelve separate step-length periods. [ABSTRACT FROM AUTHOR]

The article deals with the tax legislation of Mexico on derivatives. The definition of derivative transactions provided by Mexican tax legislation is very broad and can lead to including certain other transactions that are not necessarily financial derivative transactions. To avoid these interpretations, tax authorities issued rules indicating that these transactions are limited to commercial transactions known as forwards, futures, options and swaps and exchange hedges. Mexican Income Tax Law contemplates three types of financial derivative transactions: the first type of transaction is when the underlying value on which the transaction is based corresponds to interest rates or inflation indices, known as financial debt derivative transactions; the second type is when the underlying value is tied to merchandise, currency, stock indexes or baskets or other securities, called financial capital derivative transactions. The third type of financial derivative transaction is when the underlying value is a combination of various underlying values that include capital and debt, that is, cross-currency swaps, considered a mixed derivative transaction, in which case they are treated as financial debt derivative transaction.

Menu prices from 13 international restaurant franchises that operate in both El Paso and Ciudad Juárez are utilized to examine the behavior over time of the peso/dollar exchange rate. Parametric and nonparametric tests indicate that the price ratio alone provides a biased estimator for the exchange rate. In addition to the multiproduct price ratio, the empirical analysis also incorporates interest rate parity and balance of payments variables. The combination of unique microeconomic sample data with national macroeconomic variables illustrates one manner in which border economies provide information regarding the interplay of financial markets between Mexico and the United States. [ABSTRACT FROM AUTHOR]

Historically, symptoms of Mexican financial crises have been strongly reflected in the dynamics of the Mexican peso to the dollar exchange currency market. Specifically, in the Mexican financial crises during 1990''s, the peso suffered significant depreciation processes, which has important impacts in the macro- and micro-economical environment. In this paper, it is shown that the peso depreciation growth was greater than an exponential and that these growth rates are compatible with a spontaneous singularity occurring at a critical time, which signals an abrupt transition to new dynamical conditions. As in the major 1990''s financial crisis in 1994–1995, some control actions (e.g., increasing the USA dollar supply) are commonly taken to decelerate the degree of abruptness of peso depreciation. Implications of these control actions on the crisis dynamics are discussed. Interestingly, by means of a simple model, it is demonstrated that the time at which the control actions begin to apply is critical to moderate the adverse effects of the financial crisis. [Copyright &y& Elsevier]