Abstract

MEJIA-REYES, Pablo  and  DIAZ-CARRENO, Miguel Ángel. Effects of the Great Recession on state output in Mexico. EconoQuantum [online]. 2015, vol.12, n.2, pp.25-45. ISSN 2007-9869.

This paper investigates the effects of a battery of variables on total and sector output drops in the Mexican states during the Great Recession by estimating spatial and cross-section regression models. Our main results can be summarized as follows. First, there is evidence of spatial autocorrelation only in the case of total production and it seems to be negative, which does not support the hypothesis of interstate transmission of the recession. Second, total and sector production falls can be explained by the specialization in the production of tradable (mainly durable) goods. Third, exposure to external shocks plays an important role in the cases of industrial and services production, but not in total output. Fourth, there seems to be that federal fiscal policy has actually been pro-cyclical while state fiscal policies have contributed to mitigate the recession.

Keywords : Regional Business Cycles; Great Recession; Spatial Regression.

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