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Original Articles

The adjustment of nominal interest rates in Mexico: a study of the Fisher effect

Pages 255-257 | Received 28 Jul 1995, Published online: 02 Nov 2006
 

Abstract

Evidence is presented in favour of a Fisher effect between treasury bill interest rates and inflation in Mexico between 1978–94. The two series appear to be cointegrated and a unit proportional relationship between them would appear to exist such that treasury bills rates respond fully to inflationary shocks over a period of about 12 months. As such, monetary policy in Mexico is unlikely to have much impact on real rates of interest over the long-run.

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