Determining co-movements of tomato prices in the United States and macroeconomic variables in Mexico for 2023

Abstract

Objective: To analyze the co-movements of macroeconomic variables in Mexico and prices of Mexican tomato exports and to estimate the prices of Mexican tomatoes in American and Canadian supply markets based on Mexican macroeconomic variables. Design/Methodology/Approach: The research was conducted using Pearson's coefficient—calculating the standard scores for X and Y. We determined the co-movements of Mexican tomato market prices and Mexico’s GDP, the Interbank Equilibrium Interest Rate (IEIR), natural gas prices, and consumer inflation. Econometric techniques were thus combined with agricultural sector variables as a reliable precedent of the relation intensity between said variables. Results: The coefficient of determination showed an acceptable degree of linear relationship between the market prices of Mexican tomatoes in different cities and the selected macroeconomic variables, with an average correlation of 20%. We concluded that the variables are not entirely independent since they show a weak linear relationship between them. Study limitations/implications: It is crucial to conduct studies to determine whether the coefficients of determination support linearity or independence between the evaluated macroeconomic variables. Findings/Conclusions: Econometric techniques were combined with agricultural sector variables as a reliable precedent of the relation intensity between said variables. The coefficient of determination showed an acceptable degree of linear relationship between the market prices of tomatoes in different cities and the selected macroeconomic variables. We recommend the creation of a price forecasting model.