Author(s)

Eduardo Loría, Jorge Ramírez

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It is demonstrated through an Structural Vector Auto Regression (SVAR) model which distinguishes short and long term effects, that the monetary policy implemented in Mexico (1970-2008) has been successful in reducing inflation at the cost of stagnation, especially after 2002. Inflation Targeting is contradictory in itself because, while it is efficient in improving transparency and credibility of the monetary policy, it does not solve the structural causes of inflation and conversely, increases the financial costs of economic agents.

Classical Dichotomy, Structural Vector Auto Regression Model, Monetary Policy, Inflation Targeting

Loría, E. and Ramírez, J. (2011) Inflation, Monetary Policy and Economic Growth in Mexico. An Inverse Causation, 1970-2009. Modern Economy, 2, 834-845. doi: 10.4236/me.2011.25093.