Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/100106
Authors: 
Vaughan, Daniel
Year of Publication: 
2013
Series/Report no.: 
Working Papers, Banco de México 2013-12
Abstract: 
I study the diffusion process of permanent disinflationary shocks in the Mexican economy using disaggregated price data for 283 goods across 46 cities in the period 1995-2012. I first show that the distribution of shocks shows considerable heterogeneity, with more than 80% of all cases having experienced a break. I then show that both the likelihood and timing are spatially correlated across cities, and find a positive and concave relationship between CPI weights and the likelihood and timing of a break. These findings suggest that the process of structural change follows a diffusion process across the spatial and goods dimensions.
Subjects: 
structural change
inflation
spatial econometrics
trend-stationary
emerging economy
Mexico
JEL: 
E30
E31
N16
N26
O54
C21
C22
C24
Document Type: 
Working Paper
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