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Made in Mexico : energy reform and manufacturing growth / prepared by Jorge Alvarez and Fabian Valencia.

By: Contributor(s): Material type: TextTextSeries: IMF working paper ; WP/15/45.Publication details: [Washington, D.C.] : International Monetary Fund, ©2015.Description: 1 online resource (30 pages) : color illustrationsContent type:
  • text
Media type:
  • computer
Carrier type:
  • online resource
ISBN:
  • 1498333214
  • 9781498342513
  • 1498342515
  • 9781498333214
ISSN:
  • 2227-8885
Subject(s): Genre/Form: Additional physical formats: Print version:Print Version:: No titleDDC classification:
  • 333.8 333.823
LOC classification:
  • HG3881.5.I58 W67 No. 15/45eb
Online resources:
Contents:
Cover; Abstract; Contents; I. Introduction; II. The Mexican Manufacturing and Energy Sectors, and The Energy Reform; A. The components of manufacturing growth; B. The role of energy as an input in production and the structure of the energy sector; C. The Mexican energy reform and energy prices; III. Energy Prices and Manufacturing Output; A. Data description; B. Estimation of energy price elasticities; C. Quantitative importance; IV. Energy Prices in a Panel VAR Framework; V. Conclusion; References.
Summary: This paper assesses the real effects of the energy reform in Mexico by looking at its impact on manufacturing output through changes in energy prices. Using sub-sector and state-level manufacturing output data, along with past variation in energy prices, we find electricity prices--relative to oil and gas--to be more important in the manufacturing process, with a one standard deviation reduction in electricity prices leading to a 2.8 percent increase in manufacturing output. Our estimated elasticities together with plausible reductions in electricity tariffs derived from the energy reform, could increase manufacturing output by up to 3.6 percent, and overall real GDP by 0.6 percent. Larger reductions are possible over the long run if increased efficiency in the sector leads electricity prices to converge to U.S. levels. Moreover, including the impact of lower electricity tariffs on the services sector, could lead to significantly larger effects on GDP. Accounting for endogeneity of unit labor costs in a panel VAR setting leads to an additional indirect channel which amplifies the impact of electricity prices on output--Abstract.
Holdings
Item type Current library Collection Call number Status Date due Barcode Item holds
eBook eBook e-Library EBSCO Business Available
Total holds: 0

"February 2015."

"Western Hemisphere Department."

Includes bibliographical references (pages 28-30).

This paper assesses the real effects of the energy reform in Mexico by looking at its impact on manufacturing output through changes in energy prices. Using sub-sector and state-level manufacturing output data, along with past variation in energy prices, we find electricity prices--relative to oil and gas--to be more important in the manufacturing process, with a one standard deviation reduction in electricity prices leading to a 2.8 percent increase in manufacturing output. Our estimated elasticities together with plausible reductions in electricity tariffs derived from the energy reform, could increase manufacturing output by up to 3.6 percent, and overall real GDP by 0.6 percent. Larger reductions are possible over the long run if increased efficiency in the sector leads electricity prices to converge to U.S. levels. Moreover, including the impact of lower electricity tariffs on the services sector, could lead to significantly larger effects on GDP. Accounting for endogeneity of unit labor costs in a panel VAR setting leads to an additional indirect channel which amplifies the impact of electricity prices on output--Abstract.

Online resource; title from pdf title page (IMF.org Web site, viewed March 2, 2015).

Cover; Abstract; Contents; I. Introduction; II. The Mexican Manufacturing and Energy Sectors, and The Energy Reform; A. The components of manufacturing growth; B. The role of energy as an input in production and the structure of the energy sector; C. The Mexican energy reform and energy prices; III. Energy Prices and Manufacturing Output; A. Data description; B. Estimation of energy price elasticities; C. Quantitative importance; IV. Energy Prices in a Panel VAR Framework; V. Conclusion; References.

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