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Title: Oil prices and the real business cycle: The case of Mexico

Abstract

In the last fifteen years, the Mexican economy has experienced periods of high economic growth, as well as dramatic setbacks. Throughout this period the stream of certain key macroeconomic aggregates of the Mexican economy maintained a close relation with the movements of the international price of crude oil. The oil industry is important to the Mexican economy because it represented for the period of study 56% of total exports, 14% of GDP and 37% of fiscal revenues. The aim of this dissertation is to identify how much of the short-term fluctuations of certain macroeconomic variables of the economy can be explained by fluctuations of the price of oil. The strategy is to set up a general equilibrium model and explore the extent to which it can account for the observed behavior of the Mexican economy's quarterly data, thus extending recent real business cycle models and numerical techniques to small open economies. The basic Dutch Disease model was modified. A labor-leisure choice, investment in all productive sectors, and adjustment costs in the formatation of capital were added. Oil is modeled explicitly. As extensions to the benchmark model, government consumption of both types of goods, tradables and non-tradables, as well as themore » holdings of real money were added. For this last model, money is held by the consumer because it enables him to economize on transaction costs. Oil prices were found to influence other exogenous variables affecting the Mexican economy, thus augmenting the impact of an oil price shock on the economy. Still, the theoretical correlation between GDP and the price of oil is lower than its empirical counterpart. The general conclusion is that the hypothesized existance of consumption smoothing should be questioned.« less

Authors:
Publication Date:
Research Org.:
Duke Univ., Durham, NC (United States)
OSTI Identifier:
7169135
Resource Type:
Miscellaneous
Resource Relation:
Other Information: Thesis (Ph.D.)
Country of Publication:
United States
Language:
English
Subject:
29 ENERGY PLANNING, POLICY AND ECONOMY; MEXICO; ECONOMIC ANALYSIS; PETROLEUM; PRICES; PETROLEUM INDUSTRY; ECONOMIC IMPACT; STATISTICAL MODELS; DEVELOPING COUNTRIES; ECONOMICS; ENERGY SOURCES; FOSSIL FUELS; FUELS; INDUSTRY; LATIN AMERICA; MATHEMATICAL MODELS; NORTH AMERICA; 290201* - Energy Planning & Policy- Economics- (1992-); 294002 - Energy Planning & Policy- Petroleum

Citation Formats

Aboumrad, G J. Oil prices and the real business cycle: The case of Mexico. United States: N. p., 1993. Web.
Aboumrad, G J. Oil prices and the real business cycle: The case of Mexico. United States.
Aboumrad, G J. 1993. "Oil prices and the real business cycle: The case of Mexico". United States.
@article{osti_7169135,
title = {Oil prices and the real business cycle: The case of Mexico},
author = {Aboumrad, G J},
abstractNote = {In the last fifteen years, the Mexican economy has experienced periods of high economic growth, as well as dramatic setbacks. Throughout this period the stream of certain key macroeconomic aggregates of the Mexican economy maintained a close relation with the movements of the international price of crude oil. The oil industry is important to the Mexican economy because it represented for the period of study 56% of total exports, 14% of GDP and 37% of fiscal revenues. The aim of this dissertation is to identify how much of the short-term fluctuations of certain macroeconomic variables of the economy can be explained by fluctuations of the price of oil. The strategy is to set up a general equilibrium model and explore the extent to which it can account for the observed behavior of the Mexican economy's quarterly data, thus extending recent real business cycle models and numerical techniques to small open economies. The basic Dutch Disease model was modified. A labor-leisure choice, investment in all productive sectors, and adjustment costs in the formatation of capital were added. Oil is modeled explicitly. As extensions to the benchmark model, government consumption of both types of goods, tradables and non-tradables, as well as the holdings of real money were added. For this last model, money is held by the consumer because it enables him to economize on transaction costs. Oil prices were found to influence other exogenous variables affecting the Mexican economy, thus augmenting the impact of an oil price shock on the economy. Still, the theoretical correlation between GDP and the price of oil is lower than its empirical counterpart. The general conclusion is that the hypothesized existance of consumption smoothing should be questioned.},
doi = {},
url = {https://www.osti.gov/biblio/7169135}, journal = {},
number = ,
volume = ,
place = {United States},
year = {Fri Jan 01 00:00:00 EST 1993},
month = {Fri Jan 01 00:00:00 EST 1993}
}

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