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In this paper we attempt to characterize Mexico's trade flows during the NAFTA era. The import and export equations are derived from the imperfect substitute goods model of trade and are estimated with monthly data for the period 1994-2014 using Johansen's cointegration approach. We find that all variables can be described as processes with stochastic trends and that there exists one cointegration relation for each trade equation. In both cases, the estimated long run elasticities with respect to prices and income are statistically significant and consistent with economic theory. In particular, both trade flows are inelastic with respect to their respective relative prices although these findings are consistent with the Marshall-Lerner condition. Additionally, Mexican imports are elastic with respect to real aggregate production, a fact that confirms that Mexico's economic growth is highly dependent on imported goods. Differently than other studies, we find that Mexican exports are inelastic to industrial production in USA during this period, which implies that they have become more stable against fluctuations in the neighbor's economy. [ABSTRACT FROM AUTHOR]

This paper presents an econometric analysis of the demand for the monetary aggregate M1 for Mexico. Using cointegration techniques, we identify both a stable long-run relationship between M1 and its determinants, and a statistically sound single-equation error-correction model. Results are used to carry out the following simple applications: i) empirical determination of the value and stability of dual inflationary equilibria, given the observed seigniorage levels; ii) calculation of the seigniorage maximizing inflation rate, and iii) analysis of the potential relationship between a measure of excess money and inflation. Results indicate that the low inflation equilibrium is stable, and that the excess money indicator shows, in retrospective, some capacity in predicting inflationary pressures. [ABSTRACT FROM AUTHOR]