Specification of a Borderplex Econometric Forecasting Model

Abstract

Historically linked by geography, trade, and culture, border areas of the United States and Mexico are becoming even more closely integrated by the elimination of trade and investment barriers under the North American Free Trade Agreement. Greater economic integration raises the question of whether the traditional approach to regional econometric modeling is applicable to border metropolitan areas. This article examines this issue with respect to the El Paso-Ciudad Juárez borderplex by specifying and estimating an econometric model and then simulating it under different currency conditions. Simulation output from the model is also compared and contrasted with extrapolations from a Bayesian vector autoregressive model. Results indicate that the traditional framework provides a viable means for analyzing international border region business trends.

Short‐term water consumption dynamics in El Paso, Texas

“…Metropolitan nonagricultural employment and national consumer price index data are collected by the Bureau of Labor Statistics. For local business cycle measurement, the employment series provides the broadest gauge currently available for this city [Fullerton, 2001].…”

“…Benchmark extrapolations compiled in this manner have previously been shown to be accurate relative to econometric and time series counterparts in simulation exercises conducted for regional economies [Fullerton et al, 2001]. The forecasts generated by the LTF model and random walk techniques are then segregated into step length forecasts.…”

Short-run maquiladora employment dynamics in Tijuana

“…Results of these studies identify a variety of growth impacts associated with regional agglomeration effects. Aggregate employment effects have also been examined in cross-border contexts for maquiladoras (Gruben 1990;Silver and Pavlakovich 1994;Fullerton 2001). In an early effort, Ayer and Layton (1974) estimate twin plant impacts on U.S. employment and population resulting from cross-border consumption expenditures of Mexican employees.…”

An Econometric Approach for Modeling Population Change in Doña Ana County, New Mexico

“…One standard approach posits income differentials and employment opportunities as primary determinants of international migration (Massey et al, 1994). Places located immediately along an international border are affected not only by changes outside the region, but outside the country as well (Fullerton, 2001). Population growth due to migration is attributed to wage differentials and employment opportunities as immigrants search for improved economic conditions.…”

“…Accordingly, studies of migration patterns can be analyzed using relative wage, income, and labor market data for different countries and regions (Bolton, 1985;Fullerton, 2001; Hernández-Murillo et al, 2011). Empirical evidence indicates that no single functional form or modeling strategy is superior to all others (Cushing & Poot, 2004).…”