Modeling oil price uncertainty effects on economic growth in Mexico: a sector-level analysis

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 heteroskedas...

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Bibliographic Details
Published in:Environmental science and pollution research international 2022-10, Vol.29 (49), p.73987-74002
Main Authors: Rodríguez-Benavides, Domingo, Andrés-Rosales, Roldán, del Río-Rama, María de la Cruz, Irfan, Muhammad
Format: Article
Language:English
Subjects:
Aquatic Pollution
Atmospheric Protection/Air Quality Control/Air Pollution
Autoregressive models
Bivariate analysis
Costs
Earth and Environmental Science
Economic activity
Economic analysis
Economic conditions
Economic development
Economic growth
Economic models
Economic sectors
Economics
Ecotoxicology
Emerging markets
Environment
Environmental Chemistry
Environmental Health
Environmental science
Global economy
Impact analysis
Investments
Macroeconomics
Oil
Prices
Public policy
Recessions
Research Article
Severe acute respiratory syndrome coronavirus 2
Uncertainty
Volatility
Waste Water Technology
Water Management
Water Pollution Control
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Summary: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.
ISSN:0944-1344
1614-7499
DOI:10.1007/s11356-022-20711-2