Is it possible to handle the COVID-19 crisis in Mexico with the current monetary and fiscal policies?

Is it possible to handle the COVID-19 crisis in Mexico with the current monetary and fiscal policies?

This paper aims to show that the monetary and fiscal policies implemented in the Mexican economy are not adequate to handle crisis periods, such as the one being observed because of the COVID-19 pandemic. On the one hand, although the monetary policy of the Bank of Mexico responds to its objective o...

Full description

Saved in:
Bibliographic Details
Main Authors: Vázquez Muñoz, Juan Alberto, Tolentino Sierra, Sofia del Carmen
Format: Online
Language:spa
Published: ACACIA A.C. 2022
Online Access:https://cienciasadmvastyp.uat.edu.mx/index.php/ACACIA/article/view/284
Tags: Add Tag
No Tags, Be the first to tag this record!
id oai:ojs.pkp.sfu.ca:article-284
record_format ojs
spelling oai:ojs.pkp.sfu.ca:article-2842022-02-24T21:26:27Z Is it possible to handle the COVID-19 crisis in Mexico with the current monetary and fiscal policies? ¿Se puede hacer frente a la crisis por el COVID-19 en México con las políticas monetaria y fiscal actuales? Vázquez Muñoz, Juan Alberto Tolentino Sierra, Sofia del Carmen Política fiscal Política monetaria Inversión pública Crecimiento económico COVID-19 Fiscal policy Monetary policy Public investment Economic growth COVID-19 This paper aims to show that the monetary and fiscal policies implemented in the Mexican economy are not adequate to handle crisis periods, such as the one being observed because of the COVID-19 pandemic. On the one hand, although the monetary policy of the Bank of Mexico responds to its objective of maintaining low and stable inflation, it is also subject to the monetary policy of the United States. Given the weakness of the Mexican financial system and the free capital flows, there is a floor above zero for the interest rate target, which has prevented the interest rate from being negative in crisis periods. On the other hand, the equilibrated budget policy has been accompanied by a progressive decrease in public investment, which is the key tool to stabilize economic activity and growth. Both characteristics, the impossibility of setting a negative real interest rate and the drop in public investment as a percentage of GDP, have caused the Mexican economy to deviate from its trend level of production during periods of crisis and also to adapt to a lower growth trend. El presente artículo tiene como objetivo mostrar que las políticas monetaria y fiscal implementadas en la economía mexicana no son adecuadas para contrarrestar los periodos de crisis, tal como el que se está observando como consecuencia de la pandemia por el COVID-19. Por un lado, si bien la política monetaria del Banco de México responde a su objetivo de mantener una inflación baja y estable, también está supeditada a la política monetaria de los Estados Unidos y, dada la debilidad de su sistema financiero y el libre flujo de capitales, hay un piso superior a cero para la tasa de interés objetivo, lo cual ha impedido que la tasa de interés sea negativa en periodos de crisis. Por otro lado, la política de equilibrio fiscal se ha acompañado de una disminución progresiva de la inversión pública, la cual es la herramienta clave para estabilizar la actividad económica y el crecimiento. Ambas características, la imposibilidad de fijar una tasa de interés real negativa y la caída de la inversión pública como porcentaje del PIB, han provocado que durante los periodos de crisis la economía mexicana se desvíe a la baja de su nivel tendencial de producción y también se adapte a una tendencia menor de crecimiento. ACACIA A.C. 2022-02-24 info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion Artículo revisado por pares application/pdf text/html https://cienciasadmvastyp.uat.edu.mx/index.php/ACACIA/article/view/284 10.46443/catyp.v17i2.284 Ciencias Administrativas. Teoría y Praxis; Vol. 17 No. 2 (2021): JULIO - DICIEMBRE; 11 - 31 Ciencias Administrativas. Teoría y Praxis; Vol. 17 Núm. 2 (2021): JULIO - DICIEMBRE; 11 - 31 2683-1465 2683-1457 spa https://cienciasadmvastyp.uat.edu.mx/index.php/ACACIA/article/view/284/316 https://cienciasadmvastyp.uat.edu.mx/index.php/ACACIA/article/view/284/317 http://creativecommons.org/licenses/by-nc-nd/4.0
institution CIENCIAS ADMINISTRATIVAS
collection OJS
language spa
format Online
author Vázquez Muñoz, Juan Alberto
Tolentino Sierra, Sofia del Carmen
spellingShingle Vázquez Muñoz, Juan Alberto
Tolentino Sierra, Sofia del Carmen
Is it possible to handle the COVID-19 crisis in Mexico with the current monetary and fiscal policies?
author_facet Vázquez Muñoz, Juan Alberto
Tolentino Sierra, Sofia del Carmen
author_sort Vázquez Muñoz, Juan Alberto
title Is it possible to handle the COVID-19 crisis in Mexico with the current monetary and fiscal policies?
title_short Is it possible to handle the COVID-19 crisis in Mexico with the current monetary and fiscal policies?
title_full Is it possible to handle the COVID-19 crisis in Mexico with the current monetary and fiscal policies?
title_fullStr Is it possible to handle the COVID-19 crisis in Mexico with the current monetary and fiscal policies?
title_full_unstemmed Is it possible to handle the COVID-19 crisis in Mexico with the current monetary and fiscal policies?
title_sort is it possible to handle the covid-19 crisis in mexico with the current monetary and fiscal policies?
description This paper aims to show that the monetary and fiscal policies implemented in the Mexican economy are not adequate to handle crisis periods, such as the one being observed because of the COVID-19 pandemic. On the one hand, although the monetary policy of the Bank of Mexico responds to its objective of maintaining low and stable inflation, it is also subject to the monetary policy of the United States. Given the weakness of the Mexican financial system and the free capital flows, there is a floor above zero for the interest rate target, which has prevented the interest rate from being negative in crisis periods. On the other hand, the equilibrated budget policy has been accompanied by a progressive decrease in public investment, which is the key tool to stabilize economic activity and growth. Both characteristics, the impossibility of setting a negative real interest rate and the drop in public investment as a percentage of GDP, have caused the Mexican economy to deviate from its trend level of production during periods of crisis and also to adapt to a lower growth trend.
publisher ACACIA A.C.
publishDate 2022
url https://cienciasadmvastyp.uat.edu.mx/index.php/ACACIA/article/view/284
work_keys_str_mv AT vazquezmunozjuanalberto isitpossibletohandlethecovid19crisisinmexicowiththecurrentmonetaryandfiscalpolicies
AT tolentinosierrasofiadelcarmen isitpossibletohandlethecovid19crisisinmexicowiththecurrentmonetaryandfiscalpolicies
AT vazquezmunozjuanalberto sepuedehacerfrentealacrisisporelcovid19enmexicoconlaspoliticasmonetariayfiscalactuales
AT tolentinosierrasofiadelcarmen sepuedehacerfrentealacrisisporelcovid19enmexicoconlaspoliticasmonetariayfiscalactuales
_version_ 1779057853567336448

Similar Items