External Shocks and Business Cycle Fluctuations in Mexico: How Important are U.S. Factors?

 
Author/Editor: Sosa, Sebastian
 
Publication Date: April 01, 2008
 
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Summary: This paper examines the relative importance of external shocks as sources of business cycle fluctuations in Mexico, and identifies the dynamic responses of domestic output to foreign disturbances. Using a VAR model with block exogeneity restrictions, it finds that U.S. shocks explain a large share of Mexico's macroeconomic fluctuations after NAFTA. This partly reflects greater trade integration-but also Mexico's "Great Moderation," as the country escaped its former pattern of macro-financial crises. In this period, Mexico's output fluctuations have been closely synchronized with the U.S. cycle, with a large and rapid impact of U.S. shocks on Mexican growth.
 
Series: Working Paper No. 08/100
Subject(s): Mexico | Business cycles | External shocks | United States | Economic models

Author's Keyword(s): Mexico | United States | business cycles | external shocks | spillovers | VAR
 
English
Publication Date: April 01, 2008
Format: Paper
Stock No: WPIEA2008100 Pages: 31
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
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