Manuel Ramos-Francia’s research while affiliated with Banco de México and other places

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Publications (67)


Untangling the finance-growth nexus: The dual role of financial development in the transmission of shocks
  • Article

September 2024

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4 Reads

Emerging Markets Review

Ricardo Montañez-Enríquez

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Matias Ossandon Busch

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Manuel Ramos-Francia




Central Bank Response to COVID-19

July 2022

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10 Reads

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10 Citations

Latin American Journal of Central Banking

The COVID-19 crisis has been, above all, a tragic public health crisis. It has entailed an enormous effort to respond to the demand for health services. In it, fiscal authorities have led the economic policy responses. For their part, central banks responded swiftly by easing their monetary stance and implementing facilities to provide liquidity and enable the credit in the economy. We discuss key economic issues of the central bank response, in which the monetary authorities have had to account for the crisis’ nature. We reason that the actions taken by central bank in general avoided a further deterioration of economic conditions.


Figure 1 Foreign and Domestic Financial Indicators. This figure illustrates the evolution of the quarterly foreign and domestic financial indicators from 1990 to 2020. Panel A reports quarterly averages of the VIX index used to capture global financial conditions. Panel B reports the average measure of CLIFS (domestic financial conditions, FCI) across the sample. The shadow area marks the minimum and maximum observations for this variable in each period. On both indices tighter financial conditions are represented by an increase in the indices' values.
Figure 2 Linear effect of the VIX Index on GDP growth. This figure illustrates the linear average effect of global financial conditions on GDP growth over a one quarter horizon. The estimations are based on a simplified version of Eq. 1 obtained from OLS estimates at the individual country level. The estimation is run separately for each of the 28 countries in the sample considering the full time-span in the sample from 1990 to 2018. Global financial conditions are measured with the VIX index. The blue dots represent the respective point estimates, whereas the whiskers represent the corresponding 95 percent confidence intervals for each estimation. This exercise is extended to the FCI Index and GDP growth as explanatory variables in Figure A.3 in the Appendix.
Figure A.3 Linear effects on GDP growth. This figure illustrates the linear average effect of macrofinancial conditions on GDP growth over a one quarter horizon. The estimations are based on a simplified version of Eq. 1 obtained from OLS estimates at the individual country level. The estimation is run separately for each of the 28 countries in the sample considering the full time-span in the sample from 1990 to 2018. Panel A reports the coefficient estimates for the regression of current GDP growth on future GDP growth. Panel B reports reports the coefficient estimates for the regression of current domestic financial conditions (FCI) on future GDP growth. The results for the VIX Index are reported in Figure 2 in the article. The dots represent the respective point estimates, whereas the whiskers represent the corresponding 95 percent confidence intervals for each estimation.
Stress-ridden Finance and Growth Losses: Does Financial Development Break the Link?
  • Preprint
  • File available

January 2022

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97 Reads

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Ricardo Montañez-Enríquez

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Matias Ossandon Busch

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[...]

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We evaluate this question by characterising the probability density of expected GDP growth conditional on financial stability indicators in a panel of 28 countries. Our robust results unveil a non-linear nexus between financial stability and expected GDP growth, depending on countries' degree of financial development. While both domestic and global financial factors affect expected growth, the effect of global factors is moderated by financial development. This result highlights a previously unexplored channel trough which financial development can break the link between financial (in)stability and GDP growth.

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Stress-Ridden Finance and Growth Losses: Does Financial Development Break the Link?

January 2022

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3 Reads

SSRN Electronic Journal

Does financial development shield countries from the pass-through of financial shocks to real outcomes? We evaluate this question by characterizing the probability density of expected GDP growth conditional on financial stability indicators in a panel of 28 countries. Our robust results unveil a non-linear nexus between financial stability and expected GDP growth, depending on countries’ degree of financial development. While both domestic and global financial factors affect expected growth, the effect of global factors is moderated by financial development. This result highlights a previously unexplored channel trough which financial development can break the link between financial (in)stability and GDP growth.


On the role of financial aid in a default episode

December 2018

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115 Reads

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1 Citation

Latin American Economic Review

Our aim is to explore the role of financial aid in a default episode. To that end, we develop a dynamic stochastic quantitative model of sovereign default featuring fiscal policy, endogenous financial aid and risk-averse foreign lenders. After calibrating the model, we feed output shocks into the model to show that it captures some of the most salient features of the fiscal and debt situation in Argentina during the 1998–2002. This underscores the economic nature of the decision to default and the role that official aid could have taken in avoiding such an event. In effect, given the economic challenges endured by Argentina, a full-fledged default took place. In addition, we discuss a number of policy implications associated with financial aid programs aimed at preventing sovereign default episodes.


TIIE-28 Swaps as Risk-Adjusted Forecasts of Monetary Policy in Mexico

November 2018

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16 Reads

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1 Citation

Quarterly Journal of Finance

Information extracted from financial derivatives on interest rates is commonly used to forecast movements in interest rates. However, such an extraction generally assumes that agents are risk-neutral, which is not necessarily the case. Accordingly, it might be useful to account for the agents' risk-aversion when doing these forecasts, which one can implement by adding a risk-correction. In this context, we use TIIE-28 swaps to forecast changes in monetary policy in Mexico, using a set of financial variables to account for the risk-correction. We assess whether models with a risk-correction outperform the TIIE-28 swaps rates, and find that the in-sample explained variability improves when using a risk-correction. Centrally, we document that our main model's out-of-sample forecasts are similar for short horizons (3-month), and statistically significantly better for longer horizons (9 to 24-month), compared to the direct use of TIIE-28 swaps interest rates. © 2019 World Scientific Publishing Company. Midwest Finance Association.


Inflation Dynamics under Fiscal Deficit Regime Switching in Mexico

November 2018

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62 Reads


Citations (38)


... In other words, loans between countries or private entities, such as companies and financial institutions, are susceptible to default. In this perspective, investment tends to decrease, and corporate defaults increase, negatively affecting working capital factors in the economic system, forming a situation that can get out of hand: the lack of liquidity and systemic risk can quickly evolve into widespread insolvencies (Ramos-Francia & García-Verdú, 2022). ...

Reference:

Risk assessment when granting credit to non-financial legal entities
Central Bank Response to COVID-19
  • Citing Article
  • July 2022

Latin American Journal of Central Banking

... Las estimaciones donde la producción estadounidense no presenta cambios en sus efectos sobre la producción mexiquense o no son significativos resultan inconsistente con lo reportado en la literatura para el caso nacional (Cuevas et al., 2003;Chiquiar y Ramos-Francia, 2004;Loría y Salas, 2015). Una posible explicación de estos primeros hallazgos es que la economía nacional absorbe los efectos de la economía estadounidense y después los transmite a sus regiones y estados, por lo que cuando se incorporan medidas del producto nacional -en especial del resto y del centro de México-y del estadounidense de manera simultánea se "combinan sus efectos" y se obtienen resultados diferentes a los esperados. ...

Bilateral Trade and Business Cycle Synchronization: Evidence from Mexico and United States Manufacturing Industries
  • Citing Book
  • October 2004

... bank raises the interest rate by specific amounts if the inflation rate exceeds the inflation target or if real GDP surpasses potential GDP (Taylor, 2019). The application in Mexico's monetary policy and inflation targeting has been studied by Ramos-Francia & Torres (2005), Anzaldo and Benavides (2020) and Trejo- García et al. (2024). These authors noted that maintaining fiscal order and adequate response to inflationary shocks are key factors in ensuring monetary discipline. ...

Reducción de la inflación a través de un esquema de objetivos de inflación: La experiencia mexicana
  • Citing Book
  • July 2005

... For instance, for the calm regime, the authors also find that the peak responses of inflation happens within the first 6 months after the monetary28 Other studies also document changes in the monetary transmission mechanism after inflation targeting in Mexico. See for instanceRamos-Francia and Torres (2006),Capistrán and Ramos-Francia (2010),Chiquiar et al. (2010),García-Verdú (2006), andCortés (2013). ...

Dinámica de la inflación en México: Una caracterización utilizando la nueva curva de Phillips
  • Citing Book
  • December 2006

... The diagnostic process [Chiquiar, D., Noriega, A., & Ramos Francia, M: 2012] consists in verify compliance with the hypotheses of the model once it has been adjusted to a data series: ...

Un Enfoque de Series de Tiempo para Probar un Cambio en Persistencia de la Inflaci´on: La Experiencia de México

... En una primera etapa de esta agenda de investigación (Chiquiar, Fragoso y Ramos Francia, 2007), se identificó el patrón de ventajas comparativas de México y se documentaron los cambios que éste pudiese estar sufriendo a partir de la mayor presencia en los mercados de competidores importantes que se han especializado en productos similares a México. En ese trabajo se mostró que el índice de Ventaja Comparativa Revelada (VCR) es un concepto que permite explicar el desempeño relativo de las exportaciones manufactureras mexicanas en los mercados de exportación. ...

La ventaja comparativa y el desempeño de las exportaciones manufactureras mexicanas en el periodo 1996-2005
  • Citing Book
  • September 2007

... Marco teórico D e acuerdo con datos del Banco de México (Amoroso, Chiquiar, Quella, & Ramos-Francia, 2008), el poco o nulo crecimiento de las exportaciones manufactureras de México, a partir del año 2001 a 2004, fue ocasionado en parte por la mayor presencia de los mercados de China y otros países similares a México. Este fenómeno no es particular de esta economía; alrededor del mundo los gobiernos han creado reglas o implementado incentivos para animar a los inversionistas extranjeros a trabajar con firmas domésticas, tanto pequeñas como grandes, para promover la modernización de la cadena de valor e invertir en el desarrollo del capital humano, entre ellos, políticas macroeconómicas, ya que consideran que son una determinante importante para el crecimiento económico y del empleo; comercio exterior y políticas de inversión extranjera directa, y por último, normas y políticas del mercado laboral (Ernst, Berg, & Auer, 2007). ...

Determinantes de la ventaja comparativa y del desempeño de las exportaciones manufactureras mexicanas en el periodo 1996-2005
  • Citing Book
  • February 2008

... In the case of Mexico, it is difficult to analyze the labor market due to its multidimensionality and structural components. For example, Alcaraz et al. (2008) show that informal employment is a structural problem in the Mexican labor market and that it presents problems for measuring the entire market. Moreover, this labor market segment has significant differences in labor productivity, inducing a more rigid recomposition arising from reallocating workers in the labor market between formal and informal employment. ...

Diferenciales salariales intersectoriales y el cambio en la composición del empleo urbano de la economía mexicana en 2001-2004
  • Citing Book
  • July 2008

... 21 Additionally, these factors are related to some macroeconomic variables, for example, Dewachter and Lyrio (2006) find that the level factor is correlated with longterm inflation, the slope factor is related to the predictable components of inflation and the business cycle, and the curvature factor is associated with the current monetary policy stance. In the particular case of Mexico, Cortés et al. (2008) show that the first two factorsthe level and the slope-explain 95% of the variation in the Mexican yield curve. In addition, they conclude that the level factor has a positive correlation with measures of long-term inflation expectations, while the slope factor shows a negative correlation with the bank funding rate (the monetary policy instrument). ...

Un análisis empírico de la estructura temporal de tasas de interés en México
  • Citing Book
  • July 2008

... It is worth mentioning that these latent variables, or factors of the yield curve, are named according to their effect on the latter: the level factor affects the entire curve; the slope factor affects the short-and long-term maturities of the curve; and the curvature factor has a larger effect on medium term maturities, between 3 and 7 years. 21 Additionally, these factors are related to some macroeconomic variables, for example, Dewachter and Lyrio (2006) find that the level factor is correlated with longterm inflation, the slope factor is related to the predictable components of inflation and the business cycle, and the curvature factor is associated with the current monetary policy stance. In the particular case of Mexico, Cortés et al. (2008) show that the first two factorsthe level and the slope-explain 95% of the variation in the Mexican yield curve. ...

Un modelo macroeconómico de la estructura temporal de tasas de interés en México
  • Citing Book
  • July 2008