Title
An error correction analysis of U.S.-Mexico trade flows
Publication Date
6-1-2005
Publication Name
International Trade Journal
Volume
19
Issue
2
First Page
179
Last Page
192
Source Full Text URL
https://doi.org/10.1080/08853900590933143
Document Type
Article
DOI
10.1080/08853900590933143
Abstract
Estimation of bilateral trade elasticities is less well documented than is the case for aggregate trade flows. This study estimates bilateral trade equations for Mexico and the United States. The empirical analysis is carried out using an error correction approach that allows imports and exports to adjust over time to changes in the independent variables that affect the demand for them. Results obtained indicate that imports and exports between the two neighbors react heterogeneously to variations in domestic prices, foreign prices, and currency values. Lag structures between the two trade equations also differ from each other.