Jorge G. Gonzalez

Intra-industry trade between the united states and the major latin american countries: Measurement and implications for free trade in the Americas

This paper presents estimates for the level of intra-industry trade in the 1991 bilateral commerce between the United States and Argentina, Brazil, Chile, Colombia, Mexico, Paraguay, Uruguay, and Venezuela. As theory predicts, intra-industry trade is positively correlated with income and with foreign investment in this study. Furthermore, Mexico and the United States present high levels of intra-industry trade, whereas the other Latin American countries analyzed have relatively low levels. The paper concludes that Mexico should experience much less difficulty in adjusting to free trade with the United States than the other countries. The low levels of intra-in-dustry trade between the United States and the other Latin American nations signal that increased trade between these areas would bring about significant dislocation of resources and high adjustment costs.

An Empirical Estimation of the Level of Intra-Industry Trade between Mexico and the United States

This chapter presents an evaluation of the level of intra-industry trade between Mexico and the United States. The calculated indexes of intraindustry trade indicate a rapid increase in this type of trade during the 1982–90 period. Additionally, the current level of intra-industry trade between the two nations is quite high when compared with similar indexes of other nations. These results help to explain the apparent ease with which the United States adjusted to increased Mexican imports during the 1980s. Furthermore, the high level of intra-industry trade indicates that after NAFTA has been implemented there should be no major dislocation of productive activities in either of these countries as a result of the expansion in trade.

A contemporary analysis of Mexican stock market volatility

It is found that there has been an increase in the volatility of the Mexican stock market over the past decade. However, employment of a GARCH model in conjunction with Tsays outlier methodology demonstrates that the increased volatility is associated with outliers, not the underlying processes of the market. The association of outlier shocks with specific events indicates that market shocks were generated mainly by domestic factors during the first half of the 1990s, while international factors were the primary culprits after 1995.

The information in the Mexican term structure of interest rates: capital market implications

Abstract This paper employs the term structure approach to examine Mexican security markets during the recent period of political and economic turmoil. We investigate the characteristics of these markets and the forecast applicability of the pure expectations hypothesis to interest rates in Mexico. We find that both forward rates and spot rate spreads are found to have significant forecasting ability for future spot rates for Mexico. Both forecasting approaches suggest greater predictive ability during the period of higher interest rates and general economic volatility (1995–1996) than the more stable economic environment of the early 1990s (1991–1994).

An empirical analysis of the U.S. Senate vote on NAFTA and GATT

This paper examines the determinants of the voting behavior of the U.S. Senate on the North American Free Trade Agreement and the General Agreement on Tariffs and Trade. Public choice theory suggests that the voting behavior of senators is influenced by constituent interests, special interest politics, and their ideology. This paper uses probit analysis to test the significance of the above factors. The results indicate that constituent economic interests and special interest money were significant determinants of the Senate voting on the North American Free Trade Agreement but not on the General Agreement on Tariffs and Trade.

Antidumping and Safeguard Measures in the Political Economy of Liberalization: The Mexican Case

Mexicos creation and use of safeguard and antidumping processes to advance its liberalization illustrate three key points: (1) The country was able to use the instruments without losing political control. In a period of crisis that threatened congressional approval of critical steps in the liberalization-brought on by currency overvaluation and recession, along with unexpected demands from the United States in the North American Free Trade Agreement negotiations-the government applied a number of trade defense measures. Once the problems were addressed with adequate instruments the number of measures dropped drastically. The instruments had not been captured by protection-seeking interests; (2) The country adopted a liberalization-accepting measure of international norms. An important innovation that Mexico made operational was the use within World Trade Organization (WTO) rules of prevailing international prices as the measure of competition that industry was expected to meet. The WTO rules would also have allowed the use of other standards-as in traditional antidumping-using countries-that impose less discipline. Moreover, the Mexican standard was consistent with the government-industry understanding that though Mexican industry would be protected against extraordinary circumstances it would be expected to face up to international competition; (3) Political judgment and political courage are essential. While mastery of the technical elements of a safeguard or antidumping investigation is mandatory, sustaining liberalization depends in significant part on the political skills to know when to emphasize the technical elements, when to rely more on the discretion the government retains under the rules, and on the courage to do it.

Illegal immigration in the presence of labor unions.

This paper examines the application of monetary policy in a world of uncertainty where, in particular, the monetary authority is unaware of how private agents form expectations. The results derived in this paper provide an indication that, for simple policy objectives, ignorance about how expectations are formed need not be a hindrance in pursuing those objectives. [D81]

The Role of Intra-Industry Trade in the Service Sector

Internationalization of the world economy has made trade a key factor in the growth potential of nearly every nation’s economy. Hence, economists have become increasingly interested in the determinants of international trade and competitiveness. Empirical Methods in International Trade captures the many aspects of this trend in globalization through practical techniques well-founded in economic theory. The authors, comprising some of the most influential applied international economists of their generation, use cutting-edge models to develop empirical approaches to critical aspects of economic interchange. These approaches are developed and explained carefully with the goal of making them accessible to a wide audience.