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International synchronization of the Mexican states business cycles: Explaining factors

Pablo Mejía-Reyes, Liliana Rendón-Rojas, Reyna Vergara-González and Patricio Aroca ()

The North American Journal of Economics and Finance, 2018, vol. 44, issue C, 278-288

Abstract: The aim of this paper is to identify the explaining factors of the synchronization of the business cycles of the Mexican states and those of the US economy. The cycle indicator is obtained by de-trending the series of total formal employment (Mexican states) and nonfarm employment and industrial production (US). In general, our panel data model estimations suggest the existence of spatial autocorrelation and significant time-period fixed effects. Also, the estimates indicate a significant and positive effect of the ratio of foreign direct investment to gross domestic product (GDP), which may be supplementing the impact of international trade (driven by the most internationally integrated states) and a negative effect of the ratio of remittances to GDP (driven by less integrated states). Finally, the evidence suggests that more similar productive structures yield more synchronized business cycles.

Keywords: Growth cycles; International synchronization; Sub-national business cycles; Mexican states (search for similar items in EconPapers)
JEL-codes: E31 E32 F41 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1016/j.najef.2018.01.009

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Handle: RePEc:eee:ecofin:v:44:y:2018:i:c:p:278-288