External Shocks and Business Cycle Fluctuations in Mexico [electronic resource] : How Important are U.S. Factors? / Sebastian Sosa.
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TextSeries: IMF Working Papers; Working Paper ; No. 08/100Publication details: Washington, D.C. : International Monetary Fund, 2008Description: 1 online resource (31 p.)ISBN: 1451869614 :ISSN: 1018-5941Subject(s): Business Cycle | GDP Growth | Real GDP | VAR | MexicoAdditional physical formats: Print Version:: External Shocks and Business Cycle Fluctuations in Mexico : How Important are U.S. Factors?Online resources: IMF e-Library | IMF Book Store Abstract: 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.
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.
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