Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129967
Authors: 
Noriega-Muro, Antonio E.
Ramos-Francia, Manuel
Rodríguez-Pérez, Cid Alonso
Year of Publication: 
2015
Series/Report no.: 
Working Papers, Banco de México 2015-13
Abstract (Translated): 
This paper presents an econometric analysis of the demand for the monetary aggregate M1 in Mexico. Using cointegration techniques, we identify both a stable long-run relationship between M1 and its determinants, and a statistically sound single-equation error-correction model. Results are used to carry out the following simple applications: (1) empirical determination of the value and stability of dual inflationary equilibria, given the observed seigniorage levels; (2) calculation of the seigniorage maximizing inflation rate, and (3) analysis of the potential relationship between a measure of excess money and inflation. Results indicate that the low inflation equilibrium is stable, and that the excess money indicator shows, in retrospective, some capacity in predicting inflationary pressures.
Subjects: 
demand for money
seigniorage
inflation
dual inflationary equilibria
cointegration
general to specific
money gap
JEL: 
C22
C32
E31
E41
H62
Document Type: 
Working Paper
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