Business Cycle Downturn Likelihood Estimation for Ciudad Juarez

Authors

  • Steven L. Fullerton University of Texas at El Paso
  • Thomas M. Fullerton, Jr. University of Texas at El Paso

DOI:

https://doi.org/10.33423/jabe.v25i6.6571

Keywords:

business, economics, recession prediction, yield curve, real exchange rate, border economics

Abstract

A monthly frequency metropolitan business cycle downturn likelihood equation is estimated for Ciudad Juarez. The binary index of economic conditions is based upon monthly IMMEX export oriented manufacturing employment. A dynamic probit methodology is used for parameter estimation. Continuous explanatory variables include a 1-year minus 1-month Mexico interest rate spread, a 2015 = 100 weighted real exchange rate index, and a 10-year minus 3-month USA interest rate spread. Parameter estimation results confirm the various hypotheses examined. However, model simulation outcomes are less favorable with the results indicating that accurate forecasting of the post-2010 business cycles may require additional refinement to the index.

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Published

2023-11-29

How to Cite

Fullerton, S. L., & Fullerton, Jr., T. M. (2023). Business Cycle Downturn Likelihood Estimation for Ciudad Juarez. Journal of Applied Business and Economics, 25(6). https://doi.org/10.33423/jabe.v25i6.6571

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Section

Articles