Abstract

DOMINGUEZ BLANCAS, Christian Said  and  RODRIGUEZ REYES, Luis Raúl. Inflation in the Mexican stock market 2009-2019: the impact of investment flows. Anál. econ. [online]. 2022, vol.37, n.95, pp.89-104.  Epub Aug 01, 2022. ISSN 2448-6655.  https://doi.org/10.24275/uam/azc/dcsh/ae/2022v37n95/dominguez.

Our hypothesis is that capital flows create inflationary processes in the Mexican securities market, which is theoretically associated with instability conditions that hinder the financing of real investment. Results of a distributed-lag model (ARDL), applied to the period 2009-2019, indicate that foreign equity investment is positively related to the deviation of share prices from their long-term inflation trend, providing an empirical proof of stock market inflation. Meanwhile, flows coming from the Mexican retirement funds are negatively related, functioning as price market shock-absorbers, arguably because of its long run investment strategy. These findings constitute evidence to open a research agenda on financial policies to improve the contribution of retirement funds in the productive sector financing.

Keywords : Financial Assets Inflation; Foreign Investment; Retirement Funds; Stock Market.

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