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

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Price:  $18.00

Author/Editor: Sebastian Sosa
Release Date: © April, 2008
ISBN : 978-1-45186-961-3
Stock #: WPIEA2008100
English
Stock Status: Available

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Description

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.

Taxonomy

Business cycles , Economic development




More publications in this series: Working Papers


More publications by: Sebastian Sosa