Oil Price Volatility & Macroeconomic Fluctuations: Recent Evidence from Mexico

Abstract

This research intends to identify the relationships between growth and key macroeconomic variables in Mexico, with a primary focus on the fluctuations in crude oil prices. Using a multiple linear regression model, the paper examines the impact of variables such as the export value, crude oil price volatility, current account balance, and industrial performance on the real GDP growth, in addition to crude oil price growth. In contrast to the mixed results reported in the literature, this study identifies a positive correlation between the growth rate of crude oil price and Mexico’s GDP. The paper concludes with a discussion on the ongoing petroleum regime reform that may shape the future of Mexico.