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International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper analyzes transmission of monetary policy rates to lending and deposit rates in Mexico. The results show that transmission of the policy rate to market rates is statistically significant in all cases, except for mortgage rates. For sight deposits, pass-through is low, with a 1 percentage point increase in the policy rate leading to a 0.2 percentage point rise in the deposit rate. For term deposits the pass-through is stronger, but remains below unity at 0.7. The pass-through to both lending and deposit rates is very rapid. The dynamic specifications show that pass-through is significant in either the current or the following month, and the long-term impact is achieved during the second month.
International Monetary Fund. Western Hemisphere Dept.

additional softness in oil prices, persistence of dollar appreciation, and global financial instability. Ecuador-specific risks center on limits to the availability of external financing, potential domestic financial system pressure associated with the economic adjustment and uncertainty about the policy response, and delays in strengthening Ecuador’s energy balance, as well as possible natural disasters. On the upside, future oil production could be higher, especially if oil prices rise again facilitating the financing of larger investment plans. Policy issues : The

International Monetary Fund. Western Hemisphere Dept.

) Unconditional oil price p =48.84 Data Oil price persistence ρ =0.8403 Data Oil price volatility σ =0.2869 Data Export volume (normalized) 1/ Q =0.0047 Data Domestic sales volume (normalized) 1/ Q d =0.0052 Data Strike Price p ¯ = 0.86 * E [ p t ] Data Share of exports hedged α =0.55 Data Domestic oil price log p t d = 3.28 + 0.18 log p t Data Growth rate

International Monetary Fund. Western Hemisphere Dept.
This 2015 Article IV Consultation highlights that since the fourth quarter of 2014, the economy of Ecuador has been hit by external shocks and is slowing down. The sharp decline in the international oil price, by about half for the Ecuadorian mix, significantly undercut oil revenues. In addition, competitiveness is being eroded by the real appreciation of the exchange rate. In the face of the economic slowdown, bank liquidity conditions have tightened, credit growth has slowed, and nonperforming loans have risen. Despite the slowdown, inflation is picking up. Owing to the shocks and expected adjustment, the economy is projected to contract somewhat in 2015, while the external position deteriorates.