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112. Permanent and Transitory Components of Business Cycles: Their Relative Importance and Dynamic Relationship
- Author:
- Chang-Jin Kim, Jeremy Piger, and Richard Startz
- Publication Date:
- 05-2001
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- This paper investigates the relationship between permanent and transitory components of U.S. recessions in an empirical model allowing for business cycle asymmetry. Using a common stochastic trend representation for real GNP and consumption, we divide real GNP into permanent and transitory components, the dynamics of which are different in booms vs. recessions. We find evidence of substantial asymmetries in postwar recessions, and that both the permanent and transitory component have contributed to these recessions. We also allow for the timing of switches from boom to recession for the permanent component to be correlated with switches from boom to recession in the transitory component. The parameter estimates suggest a specific pattern of recessions: switches in the permanent component lead switches in the transitory component both when entering and leaving recessions.
- Topic:
- Development, Economics, and International Trade and Finance
- Political Geography:
- United States and Mexico
113. Border Effects within the NAFTA Countries
- Author:
- John H. Rogers and Hayden P. Smith
- Publication Date:
- 03-2001
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- Using consumer price indexes from cities in the U.S., Canada and Mexico, we estimate the "border effect" on U.S.-Mexican relative prices and find that it is nearly an order of magnitude larger than for U.S.-Canadian prices. However, during a very stable sub-period in Mexico (May 1988 to November 1994), the "width" of the U.S.-Mexican border falls dramatically and becomes approximately equal to the U.S.-Canadian border. We then show that when consideration is limited to cities lying geographically very close to the U.S.-Mexican border--San Diego, Los Angeles, Houston, Dallas, Tijuana, Mexicali, Juarez, and Matamoros--the border width falls compared to that estimated with the full sample of U.S. and Mexican cities, but falls only very slightly. We also present evidence that the border effect in U.S.-Mexican prices is not primarily due to the border effect in U.S.-Mexican wages. Finally, using the prices of 276 highly dis-aggregated goods and services, we estimate the variability of relative prices of different items within Mexican cities. This measure of relative price variability declines during the stable peso sub-period, but by less than the decline in nominal and real (i.e., CPI-based) exchange rate variability. Our results are strong evidence of a "nominal border effect" in relative prices within NAFTA, but also indicate that real side influences are important.
- Topic:
- Economics, Emerging Markets, and International Trade and Finance
- Political Geography:
- United States, Canada, North America, and Mexico
114. Dirt is in the Eye of the Beholder: The World Bank Air Pollution Intensities for Mexico
- Author:
- Kevin Gallagher, Francisco Aguayo, and Ana González
- Publication Date:
- 07-2001
- Content Type:
- Working Paper
- Institution:
- Global Development and Environment Institute at Tufts University
- Abstract:
- This paper identifies a number of errors and inconsistencies in a series of air pollution intensities for Mexico that were recently created by the World Bank. Because these data are being used to conduct public policy analysis and advice for Mexico and countries at similar levels of development, knowledge of the limits of these data is of utmost importance. In addition to identifying the problems with these data, this paper makes a series of adjustments to offer a corrected dataset. These newly corrected data are available on the World Bank's New Ideas in Pollution Regulation (NIPR) web page.
- Topic:
- Economics, Environment, and International Trade and Finance
- Political Geography:
- Mexico
115. Government - Financial Sector Relations and the New Financial Structure in Mexico
- Author:
- Charles W. Parker III and Susan Minushikin
- Publication Date:
- 07-2001
- Content Type:
- Working Paper
- Institution:
- Centro de Investigación y Docencia Económicas
- Abstract:
- For the first time in its modern history, Mexico is confronting a financial sector that is controlled by foreign investors. At the same time it is highly concentrated. The economic challenges that such an industry structure presents were the focus of public debate over the sales of Bancomer and Banco Serfin. The political challenges have not yet become a part of the public debate. These include changing relations between the banks and the government. This paper traces the history of government-bank relations and speculates on how this relationship may change given the new structure of Mexico's financial sector.
- Topic:
- Economics, Industrial Policy, and International Trade and Finance
- Political Geography:
- North America and Mexico
116. Moving Beyond Privatization in Latin America: The Government/Business Relationship
- Author:
- Robert Grosse
- Publication Date:
- 03-2000
- Content Type:
- Working Paper
- Institution:
- The North-South Center, University of Miami
- Abstract:
- The outcomes of regulatory policies and regimes in Argentina, Chile, and Mexico since 1990 in the telecommunications, electric power, and banking sectors are explored in this paper. How should governments regulate these oligopolistic industries, once ownership of the sectors has been passed to private hands? How can governments manage these relationships successfully and see that the greatest benefits accrue to the country? What institutional structures can best handle the problems that arise in these situations? The paper addresses these questions and concludes that, while privatizations in these sectors have been predominantly positive in the 1990s, there is still considerable room for more competition.
- Topic:
- Economics, Government, and Industrial Policy
- Political Geography:
- Latin America, Central America, and Mexico
117. Mexico — Overheating Arguments
- Author:
- Caspar Fithin
- Publication Date:
- 10-2000
- Content Type:
- Policy Brief
- Institution:
- Oxford Analytica
- Abstract:
- The recommendation reflects a conflict between the bank and the finance ministry over whether or not the economy is overheating. Increasingly, the conflict is being fought in public circles after months of low-key clashes. The uncharacteristic rift between the monetary and fiscal authorities is likely to widen over the final two months of the Zedillo administration, as signs of overheating continue to accumulate. While pressure for a substantial fiscal adjustment is likely to be irresistible when Fox takes over on December 1, concerns are growing regarding his capacity to execute such a policy.
- Topic:
- Economics, Government, Political Economy, and Politics
- Political Geography:
- North America and Mexico
118. El TLCAN y la Inversióon Extranjera Directa: El Nuevo Escenario
- Author:
- Arturo Borja
- Publication Date:
- 01-2000
- Content Type:
- Working Paper
- Institution:
- Centro de Investigación y Docencia Económicas
- Abstract:
- This working paper looks at the changes that have taken place in North America in foreign direct investment (FDI) after NAFTA. The first part analyses the regime defined in the treaty. The main four principles of this regime are: "national treatment", the prohibition of performance requirements for investors, a more liberal norm for foreign ownership of firms, institutional procedures for the solution of disputes. The rule of origin is identified as the most important measure for non-North American investors. The second part offers an empirical evaluation of changes in FDI flows during the first five years of NAFTA. It compares that period with the five years previous to the implementation of the agreement. The findings show a significant increase in FDI going to Mexico, Canada and the United States. At the same time, there have been changes in the distribution of these flows within the region. More FDI is going now to the United States than to Mexico, and investments between Canada and the U.S. are growing at a higher rate than those between Mexico and the U.S. The paper also identifies different patterns between Mexico and Canada. The increases in Canadian investments suggests that Canadian multinationals are adapting their strategies to the new conditions created by NAFTA.
- Topic:
- Economics, Emerging Markets, and International Trade and Finance
- Political Geography:
- United States, Canada, North America, and Mexico
119. Strengthening the International Financial Architecture: Where Do We Stand?
- Author:
- Morris Goldstein
- Publication Date:
- 10-2000
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- It's not easy to get senior economic officials worked up about the functioning of the international monetary system. Usually, they are preoccupied with the more immediate issues surrounding the national and global economic outlook. But the Mexican peso crisis of 1994-95 and, even more so, the Asian financial crisis of 1997-98 made crisis management important for the economic outlook and pushed many of the otherwise arcane issues in the so-called “international financial architecture” (hereafter, IFA) to the front burner of economic policy.
- Topic:
- Economics, International Organization, International Trade and Finance, and Political Economy
- Political Geography:
- Asia and Mexico
120. Latin American Trade Strategy at Century's End
- Author:
- Carol Wise
- Publication Date:
- 06-1999
- Content Type:
- Working Paper
- Institution:
- The North-South Center, University of Miami
- Abstract:
- This paper tackles the question of trade strategy and differential economic performance in Latin America, with a focus on the four countries -- Argentina, Brazil, Chile, and Mexico -- most important for the successful completion of a full Western Hemispheric integration scheme. The analysis distinguishes between a “standard” market strategy that assigns the task of economic adjustment to market forces and a “competitive” strategy that more actively employs a range of public policies to facilitate adjustment and correct for instances of market failure. The choices of strategy are explored against the backdrop of international pressures, government-business relations, and institutional reform within the state. Two main conclusions are drawn: first, the competitive strategy strongly correlates with more favorable macro-and microeconomic outcomes and, second, mediocre economic performance under a standard market strategy has undermined the spirit of collective action that will be necessary to forge ahead at the hemispheric level.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- Brazil, Argentina, Latin America, Mexico, and Chile