This publication, entitled the CEPAL Review, is covered in the Social Sciences Citation Index (SSCI), published by Thomson ISI, and in the Journal of Economic Literature (JEL), published by the American Economic Association
Mexico: what is the impact of monetary policy on unemployment rates?
Alejandro Islas C. is an Associate Professor at the Department of Statistics of the Autonomous Technological Institute of Mexico (itam), Willy Walter Cortez is Associate Professor at the Department of Quantitative Methods of the University of Guadalajara. He is a visiting fellow at the Ibero-American Institute for Economic Research at the University of Göttingen, Germany
Abstract
Abstract
In this paper we analyse the effects of a monetary policy shock on Mexican unemployment rates. Unlike previous studies, this one re-estimates unemployment to produce alternative rates comparable to those of the Organization for Economic Cooperation and Development (OECD) member countries. We find that in response to tightening monetary policy, unemployment increases with a characteristic hump-shaped pattern also found in other studies. Our results are robust to different assumptions about the nature of Mexico’s labour market.