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Economic Liberalization and External Shocks. The Hypothesis of Convergence for the Mexican States, 1994-2015

Felipe J. Fonseca, Irving Llamosas-Rosas () and Erick Rangel González

No 2018-27, Working Papers from Banco de México

Abstract: We study the convergence hypothesis for Mexican states during the period 1994-2015 considering the impact not only of NAFTA but also of other external shocks, such as China's entry into the World Trade Organization (WTO) in 2001 and the global financial crisis of 2008. Using econometric panel data models, with no fixed effects to avoid small sample bias, and following the methodology developed by Barro (2012), the main results indicate: i) presence of absolute divergence, consistent with a sigma divergence process, particularly in the period after the outbreak of the global crisis of 2008; and ii) a process weakening in conditional convergence across the sub-periods analyzed.

Keywords: Regional Economic Growth; Convergence; Panel Data (search for similar items in EconPapers)
JEL-codes: R11 C23 (search for similar items in EconPapers)
Date: 2018-12
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