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Homicides, exchange rates, and northern border retail activity in Mexico

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  • Thomas Fullerton
  • Adam Walke

Abstract

Exchange rate fluctuations and international business cycles may acutely affect retail sales in border regions where residents have the option of shopping in the neighboring country. This study examines the determinants of retail sales in six cities located along Mexico’s northern border. Retail activity in these cities is found to increase in tandem with real depreciations of the peso, lower unemployment rates in neighboring US counties, and increased border crossings. Taken together, these results suggest that cross-border shopping contributes to retail activity in the northern border region of Mexico. The opportunities for cross-border shopping may also condition the impact of violent crime on border region retail sales. In recent years, northern Mexico has been deeply affected by a crime wave associated with competition among drug cartels. Homicides related to organized crime are found to have a statistically significant negative impact on retail sales. A surge in crime levels may stifle retail activity in affected areas as extortion and attacks force some stores to close or reduce operating schedules at the same time that some potential customers elect to shop in relatively safer districts across the international divide. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Thomas Fullerton & Adam Walke, 2014. "Homicides, exchange rates, and northern border retail activity in Mexico," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(3), pages 631-647, November.
    • Handle: RePEc:spr:anresc:v:53:y:2014:i:3:p:631-647
    DOI: 10.1007/s00168-014-0636-y
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    Cited by:

    1. Fullerton & E. Pallarez & Walke, 2015. "Downtown parking meter demand in a border metropolitan economy," Applied Economics, Taylor & Francis Journals, vol. 47(48), pages 5121-5130, October.
    2. René Cabral & André Varella Mollick & Eduardo Saucedo, 2016. "Violence in Mexico and its effects on labor productivity," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(2), pages 317-339, March.
    3. Asongu, Simplice & Nnanna, Joseph & Biekpe, Nicholas & Acha-Anyi, Paul, 2018. "Contemporary Drivers of Global Tourism: Evidence from Terrorism and Peace Factors," MPRA Paper 91996, University Library of Munich, Germany.
    4. Pedro Niño & Roberto Coronado & Thomas Fullerton & Adam Walke, 2015. "Cross-border homicide impacts on economic activity in El Paso," Empirical Economics, Springer, vol. 49(4), pages 1543-1559, December.
    5. Pedro P. Orraca‐Romano & Eunice D. Vargas‐Valle, 2020. "Drug‐related violence and the decline in the number of Mexican cross‐border workers," Review of Development Economics, Wiley Blackwell, vol. 24(2), pages 485-502, May.
    6. Pedro H Albuquerque & Prasad R Vemala, 2023. "Femicide Rates in Mexican Cities along the US-Mexico Border," Working Papers hal-04167930, HAL.

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    More about this item

    Keywords

    R12; F31; F44; K42;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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