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Original Research Article
Evidence on the determinants of investment in Mexico (1993-2016)
Roberto Valencia Arriaga*1 and Angélica Hernández Leal2
1Universidad Nacional Autónoma de México
2Universidad Autónoma del Estado de México
*Corresponding Author E-mail: rova_35@yahoo.com.mx;angiehlmx@hotmail.com
Tel.:+52 155 1935 6485.
Article Number: | Pages: | | DOI:
Received: February 12, 2017 Accepted: February 15, 2017 Published: February 24, 2017
Abstract
The aim of this paper is to show evidence of the determining factors of investment decisions in Mexico, for this, we discuss the importance of the level of economic activity as the main determinant, and the variables that derivate from this one such as investor expectations and costs such e.g. the exchange rate. We emphasize the importance of the rate of return on investment and the zero effect of the interest rate on the investment. Finally, an ARDL model is presented, which confirms that the level of economic activity is the main cause, the exchange rate influences inversely and there is evidence of a crowding-out effect in the Mexican economy.
JEL classification: E22, C39, E43
Keywords: Investment, ARDL Model, Interest rate