exchange rate (SRER) dynamics across Mexico, Canada and the US in the pre-NAFTA and post-NAFTA periods. Measuring transaction … costs using the estimated threshold bands, we find evidence that Mexico still faces higher transaction costs than their …

analyzed. In the first, NAFTA is assumed to stimulate inflows of physical capital into Mexico. These inflows reduce the … to have the effect of fully integrating Mexico with the U.S. and Canada. Integration also reduces the interest rate and … raises both wage rates in Mexico, but in this case the skill premium falls and human capital accumulation speeds up only a …