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Vicente German-Soto, Cesareo Gamez Garza

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1Vicente German-Soto, 2Cesareo Gamez Garza
1. Autonomous University of Coahuila, Faculty of Economics, Unidad Camporredondo, Edificio "E", Planta Baja, entre Av. De los Maestros y David Berlanga, C.P. 25000, Saltillo, Coahuila, Mexico.
2. Autonomous University of Nuevo Leon, Faculty of Economics, Av. Lazaro Cardenas 4600 Ote. Fracc. Residencial Las Torres, C.P. 64930, Monterrey, Mexico.

Soto, Vicente German, and Cesareo Gamez Garza. "POLITICAL-BUSINESS CYCLE AND CAPITAL FORMATION IN MEXICO, 1993.1-2016.4." nt. j. of Social Science and Economic Research, vol. 4, no. 4, Apr. 2019, pp. 2687-2707, Accessed Apr. 2019.
Soto, V., & Garza, C. (2019, April). POLITICAL-BUSINESS CYCLE AND CAPITAL FORMATION IN MEXICO, 1993.1-2016.4. nt. j. of Social Science and Economic Research, 4(4), 2687-2707. Retrieved from
Soto, Vicente German, and Cesareo Gamez Garza. "POLITICAL-BUSINESS CYCLE AND CAPITAL FORMATION IN MEXICO, 1993.1-2016.4." nt. j. of Social Science and Economic Research 4, no. 4 (April 2019), 2687-2707. Accessed April, 2019.


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The relationship between political-business cycle and capital formation is studied in Mexico along 1993.1-2016.4. The political-business cycle theory (PBC) argues that economies experience expansions in elections times and, as consequence, slowdowns in the first year of the new presidential government. Time series and dynamic panel data models allow to confirm this hypothesis: for each federal government, the capital formation is higher in the last year than the first year. This result is evidence of an artificially created political-business cycle distorting the market signals and the decisions of production. Consequences for the economy are more than visible: displacements of aggregate demand originating economic recessions.