Ensayos Revista de Economía (May 2015)

Mexico and the United States: cycle synchronization, 1980.1-2013.4

  • Eduardo Loría,
  • Emmanuel Salas

Journal volume & issue
Vol. 34, no. 1
pp. 75 – 102

Abstract

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We estimated the progressive, structural synchronization of the Mexican growth cycle with that of the US (total and industrial) for 1980.1-2013.4. By applying the Quandt-Andrews (1993) and Bai-Perron (2003) unknown-breakpoint tests, we identified that before 1994.4 there was no statistically significant relationship between the Mexican GDP growth cycle and the US industrial output cycle, but a weak (statistically significant) relationship with total US GDP cycle. However, since 1997.4 and particularly since 2001.2, there is a vast and increasing synchronization and determination from the US industrial cycle to the Mexican cycle (R2 = 0.96). The degrees of freedom of Mexican domestic economic policy have thus drastically decreased.

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