Concepts and Measurements of Economic Interdependence: The Case of the United States and Mexico

María del Rosío Barajas-Escamilla (), Amir Kia () and Maritza Sotomayor
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María del Rosío Barajas-Escamilla: Social Studies Department, El Colegio de la Frontera Norte, Tijuana, BC 22560, Mexico
Amir Kia: Finance and Economics Department, Utah Valley University, Orem, UT 84058–5999, USA
Maritza Sotomayor: Finance and Economics Department, Utah Valley University, Orem, UT 84058–5999, USA

Global Economy Journal (GEJ), 2016, vol. 16, issue 1, 63-90

Abstract: We developed a theoretical model capable to analyze U.S. fiscal and monetary policy effects on Mexican exports in order to provide an alternative approach to the study of economic interdependence. The model was estimated for the sample period of 1980–2013. The existing literature evidences quantified interdependence through trade flows and ignores the role of the U.S. fiscal and monetary policies. This paper uses the concept of sensitivity, from the economic interdependence literature, to verify the long and short run relationships between the U.S. and Mexico in a context of trade integration. Our findings confirm Mexico’s sensitivity to unanticipated shocks in particular coming from the U.S. monetary policy, the exchange rate and the world oil price.

Keywords: economic interdependence; sensitivity; fiscal and monetary policies; Mexico; NAFTA (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1515/GEJ-2015-0034

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