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The Balance of Payments Offset to Monetary Policy: Monetarist, Portfolio Balance, and Keynesian Estimates for Mexico and Venezuela

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  • Kamas, Linda

Abstract

Three balance-of-payments equations are specified and estimated for Mexico and Venezuela. While a large offset is found for Venezuela, there is no evidence of a significant offset for Mexico in the 1970s. However, it is shown that from 1951 to 1970, the offset was close to minus one, suggesting there was structural change in the 1970s. The estimated offset for Venezuela in the Keynesian equation is smaller than that in the monetarist equation, supporting arguments that the latter is biased toward minus one. However, the long-run offset is minus one in accord ance with both approaches. Copyright 1986 by Ohio State University Press.

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  • Kamas, Linda, 1986. "The Balance of Payments Offset to Monetary Policy: Monetarist, Portfolio Balance, and Keynesian Estimates for Mexico and Venezuela," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(4), pages 467-481, November.
    • Handle: RePEc:mcb:jmoncb:v:18:y:1986:i:4:p:467-81
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    1. Frankel, Jeffrey A & Okongwu, Chudozie, 1996. "Liberalized Portfolio Capital Inflows in Emerging Markets: Sterilization, Expectations, and the Incompleteness of Interest Rate Convergence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 1(1), pages 1-23, January.
    2. Savvides, Andreas, 1998. "Inflation and monetary policy in selected West and Central African countries," World Development, Elsevier, vol. 26(5), pages 809-827, May.
    3. Jeffrey A. Frankel, 2010. "Monetary Policy in Emerging Markets: A Survey," NBER Working Papers 16125, National Bureau of Economic Research, Inc.
    4. Gan, Pei-Tha, 2014. "The precise form of financial integration: Empirical evidence for selected Asian countries," Economic Modelling, Elsevier, vol. 42(C), pages 208-219.
    5. Jeffrey A. Frankel, 1997. "Sterilization of money inflows: Difficult (Calvo) or Easy (Reisen)?," Estudios de Economia, University of Chile, Department of Economics, vol. 24(2 Year 19), pages 263-285, December.
    6. Waheed, Muhammad, 2010. "Foreign exchange intervention and sterilization: an investigation of State Bank of Pakistan’s Reaction Function," MPRA Paper 33161, University Library of Munich, Germany.
    7. Sergio Clavijo & Carlos Varela, 2003. "Flotación Cambiaria y Esterilización Monetaria: La Experiencia de Colombia," Borradores de Economia 256, Banco de la Republica de Colombia.
    8. Sergey Drobyshevsky & A. Kozlovskaya & Pavel Trunin, . "Monetary and Credit Policy Options for an Oil Exporting Country," Research Paper Series, Gaidar Institute for Economic Policy.
    9. Frankel, Jeffrey, 2010. "Monetary Policy in Emerging Markets," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 25, pages 1439-1520, Elsevier.
    10. Anja Shortland & David Stasavage, 2004. "Monetary Policy in the CFA Zone: Country-level Credit Policy," WIDER Working Paper Series RP2004-15, World Institute for Development Economic Research (UNU-WIDER).
    11. Augustine A. Boakye & Hassan Molana, 2007. "Fluctuation in the International Currency Reserves of Less Developed Countries: HIPC vs Non-HIPC," Dundee Discussion Papers in Economics 203, Economic Studies, University of Dundee.
    12. J. Stephen Ferris & Hossein Kavand, 2008. "The monetary effects arising from stochastic resource revenues and the subsidization of financial intermediation in resource rich developing economies," Carleton Economic Papers 08-05, Carleton University, Department of Economics.
    13. Mariam El Hamiani Khatat & Mr. Romain M Veyrune, 2019. "Liquidity Management under Fixed Exchange Rate with Open Capital Account," IMF Working Papers 2019/058, International Monetary Fund.
    14. Hossein Kavand & J. Stephen Ferris, 2012. "The inflationary effects of stochastic resource revenues in resource-rich economies with less well-developed financial markets," Applied Economics, Taylor & Francis Journals, vol. 44(29), pages 3831-3840, October.
    15. Abdul Rishad & Sanjeev Gupta & Akhil Sharma, 2022. "An Assessment of The Effectiveness of Sterilization of Central Bank Interventions: Empirical Evidence from India," Prague Economic Papers, Prague University of Economics and Business, vol. 2022(5), pages 417-440.
    16. Jeffrey A. Frankel & Chudozie Okongwu, 1995. "Liberalized Portfolio Capital Inflows in Emerging Capital Markets: Sterilization, Expectations, and the Incompleteness of Interest Rate Convergence," NBER Working Papers 5156, National Bureau of Economic Research, Inc.
    17. Melike Altinkemer, 2001. "Capital Inflows And Central Bank’s Policy Response," Discussion Papers 0103, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.

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