Modeling oil price uncertainty effects on economic growth in Mexico: a sector-level analysis |
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Authors: | Rodríguez-Benavides Domingo Andrés-Rosales Roldán del Río-Rama María de la Cruz Irfan Muhammad |
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Affiliation: | 1.Department of Applied Econometrics, Metropolitan Autonomous University, 02200, Mexico City, State of Mexico, Mexico ;2.Department of Social Sciences, Faculty of Higher Studies Cuautitlan-UNAM, 54714, Mexico, State of Mexico, Mexico ;3.Universidade de Vigo, Facultade de Ciencias Empresariais e Turismo, 32004, Ourense, Espa?a ;4.School of Management and Economics, Beijing Institute of Technology, Beijing, 100081, China ;5.Center for Energy and Environmental Policy Research, Beijing Institute of Technology, Beijing, 100081, China ;6.Department of Business Administration, ILMA University, Karachi, 75190, Pakistan ; |
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Abstract: | This paper analyzes the impact of international oil price uncertainty on the different economic sectors (primary, secondary, and tertiary) in Mexico in the period 1993:1–2020:4 through a bivariate structural vector autoregressive (VAR) model with a generalized autoregressive conditional heteroskedasticity (GARCH) in mean to capture the impact of oil volatility on economic growth at the sectoral level of economic activity. The results show that the uncertainty of the international price of oil has a differentiated effect on the different sectors of economic activity in Mexico since it does not influence the primary sector; it negatively impacts the secondary sector, and there is mixed evidence in the tertiary sector. Additionally, evidence is provided that both positive and negative shocks to the international oil price have asymmetric effects at the sectoral level in Mexico. The results highlight the need to implement public policies, at the country level, that help mitigate the effect of uncertainty in the oil market and promote economic stability at the sector level. |
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