This article studies the role that economic integration with the United States has played in the determination of Mexican GDP during the 1980-2000 period. The analysis is based on the estimation of long-run relationships and associated dynamics for the Mexican GDP and each one of its components with the US index of industrial production and the bilateral real exchange rate. It is found that the impact of the first of these variables on the GDP is close to one, implying that the trend of both economies during the sample period was similar. The magnitude of the coefficient varies in the case of each component. The real exchange rate effect is positive on the trade balance but negative on the rest of the economy. The latter effect had already been reported by other authors but this article offers a newer and more analysis of it.Cointegration, Economic Integration, Growth, Money, NAFTA, Real Exchange Rate
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