Import demand for intermediate goods in Mexico: 1993-2018

José Antonio Romero Tellaeche () and Rodrigo Aliphat Rodríguez ()
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José Antonio Romero Tellaeche: El Colegio de México
Rodrigo Aliphat Rodríguez: UNAM

Serie documentos de trabajo del Centro de Estudios Económicos from El Colegio de México, Centro de Estudios Económicos

Abstract: In this paper, we study the import of intermediate goods (MIG) for México, these imports represent 80% of total imports, and they are close related to exports and production for domestic demand. We first try to estimate a VEC model using MIG, exports, domestic demand, and real exchange rates but we find impossible to estimate directly due to problems of endogeneity between MIG, exports and domestic demand. We construct instrumental variables for exports and domestic demand. But then we face multicollinearity problems between the instrumental variables. Therefore, we estimate two separate VECs one for MIG for exports and another for MIG for domestic demand. We find minimal possibilities to increase local content for exports, but we find hope in the production for domestic demand.

Keywords: VEC; imports; intermediate goods; Mexico (search for similar items in EconPapers)
JEL-codes: F02 F14 F15 (search for similar items in EconPapers)
Date: 2019-10
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Persistent link: https://EconPapers.repec.org/RePEc:emx:ceedoc:2019-05

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