Economics, Econometrics and Finance
6 years ago

Mexican peso depreciation linked to productivity loss, US liquidity influx.

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Economic Modelling
Why does the peso-dollar exchange rate show a depreciation trend? The role of productivity differentials
Arnoldo López‐Marmolejo, Daniel Ventosa‐Santaulària

Paper Summary

The peso-dollar exchange rate has been dropping over the years, despite Mexico's solid economic policies. This is mainly due to Mexico's lower productivity compared to the US. The US also played a role in the peso's appreciation during the 2008 crisis by injecting a lot of money into the market.

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