Mexico’s Integration into NAFTA Markets : A View from Sectoral Real Exchange Rates and Transaction Costs

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Price:  $18.00

Author/Editor: Luciana Juvenal, Rodolphe Blavy
Release Date: © May, 2008
ISBN : 978-1-45186-983-5
Stock #: WPIEA2008123
Stock Status: On back-order

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A self-exciting threshold autoregressive model is used to measure transaction costs that may explain relative price differentials and nonlinearities in the behavior of sectoral real exchange rates across Mexico, Canada and the U.S. Interpreting price threshold bands as transactions costs, we find evidence that Mexico still face higher transaction costs than their developed counterparts, even though trade liberalization lowers relative price differentials between countries. The distance between countries and nominal exchange rate volatility are found to be determinants of transaction costs that limit price convergence. Other factors-including weak domestic competition and transportation-are also likely to be important.


International trade , International trade agreements

More publications in this series: Working Papers

More publications by: Luciana Juvenal ; Rodolphe Blavy