Articles providing critical insights and analysis on monetary policy issues impacting the U.S. economy and its deep financial and economic relationship with Mexico.
Research Department Working Papers
What Imports to Import Prices?
This study offers new insights into exchange rate pass-through (ERPT) using U.S. import price indexes by country-of-origin, covering two decades of monthly data.
October 25, 2024
Mexico Economic Update
Mexico’s economy shows mixed signals
Mexico’s economy continued growing steadily through August, according to the monthly GDP proxy. However, a weakening labor market and stalled consumption are signs of deceleration going into the fourth quarter.
October 25, 2024
Research Department Working Papers
The Postpandemic U.S. Immigration Surge: New Facts and Inflationary Implications
This paper combines administrative data on border encounters and immigration court records with household survey data to document two new facts about these immigrants: They tend to be hand-to-mouth consumers and low-skilled workers that complement the existing workforce. The authors build these features into a model with capital, household heterogeneity and population growth to study the inflationary effects of this episode.
October 01, 2024
Globalization Institute Working Paper
The Contribution of Foreign Holdings of U.S. Treasury Securities to the U.S. Long-Term Interest Rate: An Empirical Investigation of the Impact of the Zero Lower Bound
This paper finds empirical evidence of a possible structural break in the relationship between the foreign holdings of U.S. Treasury securities and the U.S. long-term interest rate occurring at the time when U.S. monetary policy became constrained at the zero-lower bound (ZLB).
September 25, 2024
Globalization Institute Working Paper
Exchange Rate Determination Under Limits to CIP Arbitrage
Recent theories of exchange rate determination have emphasized limited UIP arbitrage by international financial institutions. New regulations since 2008 have also led to imperfect CIP arbitrage. This paper shows that under limited CIP arbitrage the exchange rate and CIP deviation are jointly determined by equilibrium in the FX spot and swap markets.
September 23, 2024
Impact of inflation shocks on foreign exchange rates reflects central bank stature
The purchasing power parity theory of exchange rates is easily understood: A basket of goods should have the same price in different markets when that price is expressed in a common currency. However, the relationship between market-determined exchange rates and inflation shocks is not always straightforward. In the short run, central bank transparency can become an important determinant.
September 03, 2024
Globalization Institute Working Paper
Just Do IT? An Assessment of Inflation Targeting in a Global Comparative Case Study
This paper introduces novel measures to assess the effectiveness of inflation targeting (IT) and examines its performance across a broad sample of advanced economies (AEs) and emerging market and developing economies (EMDEs).
August 21, 2024
Mexico Economic Update
Mexico’s economy softens in the second quarter
Mexico’s economic activity slowed in the second quarter of 2024, missing market expectations. GDP slowed to an annualized 0.8 percent growth from 1.1 percent the previous quarter due to a loss of momentum in services and an extended contraction in the agricultural sector.
August 14, 2024
Trade liberalization reduces entrepreneurship rate
Our research suggests that if the world becomes increasingly interconnected through international trade, entrepreneurship rates will decrease over time.
August 06, 2024
Globalization Institute Working Paper
Deindustrialization and Industry Polarization
This paper adds to recent evidence on deindustrialization and documents a new pattern: increasing industry polarization over time.
August 05, 2024