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Based on a reading of Keynes according to which the General theory paves the way for an investment theory of aggregate income and a financial theory of investment, this paper focuses on an issue that is usually ignored by the currently trendy economic theories: the transcendental role played by financial institutions and money in a capitalist economy. Due to a failure of these institutions' assets to perform that induces a diminishment in the flow of cash and increases their aversion to risk, there comes a decrease in the financing of consumption and investment spending through these intermediaries; this, in turn, leads to declines in investment and consumption spending, which affects the flow of profits and wages available. The notion that this economy enjoys a general equilibrium should be discarded; likewise, the quantitative theory of money should be dispensed with. At the same time, once that we eliminate the assumption that the future is perfectly foreseeable, it is possible to conclude that these institutions are inherently plighted by a great uncertainty. The general performance of an economy improves insofar as the state successfully intervenes in order to sustain solvency, strengthening the resources via substantial spending, and does not limit itself to the financing of consumption. This paper considers the financial structure and the flow of income (especially aggregate profits), and then proposes an integrated model. [ABSTRACT FROM AUTHOR]

This paper analyzes debt securitization in underdeveloped countries, using the case of Argentina, Mexico, and Brazil. We argue that the three countries have had a significant increase in the issuance of debt securities. However, the nature of the securities issued is different in each nation. In the case of Argentina, the increase in international debt securities in circulation has to do with the issuance of government securities. In Mexico, the increase is more related to the new financing needs of Mexican non-financial corporations. While in Brazil, the increase in the issuance of debt securities is due to a combination of both factors. [ABSTRACT FROM AUTHOR]

This paper shows the effects of uncertainty of economic growth and inflation on average rates of output growth and inflation, using quarterly data of Argentina, during the last three decades. The paper employs a GARCH-M model (VAKMA model) that permits to test diagonally and symmetry relationships between the variables. The results suggest that increased growth uncertainty is associated with significantly higher average output growth (theory of precautionary savings), while higher inflation uncertainty is correlated with lower average output growth (Okun, 1971, and Friedman, 1977, arguments). Both inflation and economic growth show evidence of significant asymmetric response to positive and negative shocks of equal magnitude. [ABSTRACT FROM AUTHOR]

This paper presents an econometric analysis of the demand for the monetary aggregate M1 for Mexico. Using cointegration techniques, we identify both a stable long-run relationship between M1 and its determinants, and a statistically sound single-equation error-correction model. Results are used to carry out the following simple applications: i) empirical determination of the value and stability of dual inflationary equilibria, given the observed seigniorage levels; ii) calculation of the seigniorage maximizing inflation rate, and iii) analysis of the potential relationship between a measure of excess money and inflation. Results indicate that the low inflation equilibrium is stable, and that the excess money indicator shows, in retrospective, some capacity in predicting inflationary pressures. [ABSTRACT FROM AUTHOR]

This article examines the role that regulated Micro Finance Organizations (MFO) have played in the Bolivian financial sector development. Using occasional references, the paper also acknowledges the contribution of non-regulated MFO in improving welfare of poor population sectors. Among policy lessons, the results suggest that microfinance is important in developing financial deepening in similar countries, such as those in the region. [ABSTRACT FROM AUTHOR]

If finance is crucial to growth, as a large literature has demonstrated, then why is there wide variance in financial development across countries? Why have governments not put the appropriate policies into place to encourage the development of banks and securities markets? This paper addresses this question by exploring the development of the Mexican banking system from the 1880s to the present. It argues that the institutions that encourage financial development cannot be created at the stroke of a pen. Rather, the creation of institutions that encourage financial development are dependent upon other institutions that limit the authority and discretion of the government. In short, political institutions that constrain government are a necessary condition for economic growth. [ABSTRACT FROM AUTHOR]

This paper presents the first historical series of poverty and inequality in Mexico for the period 1950-2004. We observe that poverty reduces continuously between 1950 and 1984, and remains constant, with the exception of 1996, where it increases sharply. With regards to inequality, this variable follows an inverted U trend between 1950 and 1984, similar to the Kuznets curve; however, it increases almost continuously from 1984 on. We also show that during 1950-2004 the correlation between poverty and economic growth has been strong and negative, the correlation between poverty and inflation has been strong and positive, and the correlation between poverty and inequality has also been positive. [ABSTRACT FROM AUTHOR]