THE RELATIVE IMPORTANCE OF FOREIGN AND DOMESTIC SHOCKS TO OUTPUT AND PRICES IN MEXICO AND COLOMBIA

The Relative Importance of Foreign and Domestic Shocks to Output and P rices in Mexico and Colombia. - This paper utilizes structural VARs to evaluate the relative importance of foreign and domestic sources of v ariation in output and prices in Mexico and Colombia. The real exchang e rate and commodity export price have a large impact on both output a nd prices in Mexico, while in Colombia their effects are smaller. U.S. output and interest rates are found to play a significant role in det ermining output in Mexico and Colombia. For Mexico, external variables are found to be of much greater importance in the oil-exporting years after 1978 as compared to the 1960s.