Abstract

AVENDANO VARGAS, Blanca Lilia  and  VAZQUEZ MUNOZ, Juan Alberto. Financial instability and monetary policy in Mexico, 1990-2008. Inv. Econ [online]. 2011, vol.70, n.275, pp.63-92. ISSN 0185-1667.

The paper assesses empirically the financial structure of a sample of firms participating in the Mexican Stock Market for the period 1990-2008, with the aim of determining whether: 1) they can be characterized as Hedge, speculative or Ponzi; 2) microeconomic effects on the financial dynamics of the said firms resulting from the monetary policy framework followed by the domestic monetary authority can be identified and 3) an inflation targeting monetary policy strategy is suitable for financial stability and economic growth. Statistical evidence appears to show that in this case price stability has contributed to financial fragility of the firms under consideration.

Keywords : financial fragility; monetary policy; interest rate; exchange rate.