Two essays on exchange rate pass-through for Mexico and an essay on early currency collapses

Chapter 1 examines the effect of trade regimes on exchange rate pass-through. On the surface, empirical findings from Mexico contradict existing theory. Pass-through was close to one in the presence of non-tariff-barriers when Mexico was a closed economy, and dropped in 47/53 narrowly defined industries as import shares increased. The solution to the seemingly puzzling pass-through behavior lies on market structure effects of Mexican NTBs. Import licenses worked as privately administered tariffs instead of quantitative restrictions due to monopolist importers. The six exceptions, belonged to agriculture and paper which had state monopolies as importers. Trade liberalization eliminated monopolist importers causing import prices to fall as entry raised perceived elasticities and lowered pass-through.; Chapter 2 investigates the effects of quotas on pass-through under various market structures. Pass-through is zero with a quota under every market structure when importers behave competitively. The robustness of the result is new to the literature. Considering a monopolist importer changes the results. Pass-through with a quota depends on the curvature of demand. Two entirely new findings are that market power at home and abroad prevent importers from passing on exchange rate fluctuations, and secondly that changes in business strategies raise the possibility of negative pass-through.; Chapter 3 examines the earliest currency collapses in modern economic history. We use a standard acceleration Phillips Curve model to define overvaluation and find that England maintained an overvalued parity for six years without speculation against the Pound. Attacks on the Dollar and the Franc began immediately after the English devalued in 1931. The measure of speculation is covered interest parity using weekly quotations of interest rates, exchange rates and forward discounts from 1920-40 in the London and New York Exchanges. Significant deviations from CIP against the Pound lasted 1 month compared to 6 months against the Dollar and the Franc with premium averages of 6% and 25% respectively. There was no speculation against the Argentinean Peso due to aggressive depreciation policies which promoted healthy growth.