Research published by a UTEP economics professor shows the effects that the depreciation of the peso has had on the region’s economy as it braces for the holiday shopping season.
The University of Texas at El Paso Border Region Modeling Project, a research unit within the UTEP Department of Economics and Finance, recently published “Southern Border International Shopping and Employment: 1990-2016,” a technical report made possible by corporate and institutional sponsors such as El Paso Water, Hunt Communities and UTEP.
The research is co-authored by Tom Fullerton, Ph.D., UTEP economics professor, and Adam Walke, a former UTEP BRMP associate director.
Fullerton is well-known for assembling and systematically analyzing large volumes of specialized data that reveal the economic health of the Borderplex region every year.
“Since its inception in 1996, the Border Region Modeling Project has relied upon external financial support as a means toward quantifying some of the most important, and often misunderstood, aspects of the regional economy,” Fullerton said.
That support has helped fund a large number of economics master’s students who have subsequently embarked upon successful careers in the United States, Mexico and Canada.
Various measures of border retail activity have been analyzed in previous BRMP studies. These include total sales, taxable sales, employment levels and commercial establishments.
For this study, data on employment and establishments were collected because both variables are available for a relatively longtime span and are measured uniformly across states on the U.S.-Mexico border at the county level.
The new report shows a 10% real peso depreciation reduces border county retail employment per 1,000 people by 1.2 percent. That is a consequence of the loss in consumer purchasing power for residents of Mexico whenever the peso depreciates. Food service and lodging payrolls are less sensitive to currency fluctuations than are border retail sectors. That is because many shopping excursions out of northern Mexico take less than one day and do not require extended visits.
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