Mexico Business CycleThe term business cycle or business cycle refers to fluctuations in economic activity around its long-term growth trend. It involves shifts over time between periods of relatively rapid growth, production recovery and prosperity, and periods of relative stagnation or decline-contraction or recession. These fluctuations are often measured using real GDP. Although called cycles, these fluctuations in economic growth and decline do not follow a purely mechanical or predictable periodic pattern. In recent years economic theory has moved towards the study of economic fluctuation rather than the "business cycle". Some economists believe that calling the business cycle a “cycle” is a misnomer, due to its non-cyclical nature. They find that for the most part, barring very large supply shocks, business declines are more of a monetary phenomenon. However, the term is still widely used. Mexico's economy has achieved broad stability and greater resilience in recent years, and the country has enjoyed steady growth. Although strongly linked to the currently weak US economy, several factors including the modest external current account deficit, aided by high oil export prices, FDI, low external debt ratios, well-placed FE reserves, well-established financial regulations supervised and well capitalized, liquid and profitable banks have helped strengthen Mexico's position. Business cycles in developing countries are quite unknown to the world at large even today. One of the main problems that developing economies face may be the presence of a greater degree of uncertainty than developed economies. Characteristics of economic cycles. Fluctuations in aggregate economic activity. 2. Expansion/Boom and Contraction/Recession Cycles. The peak and trough are the turning points of the business cycle. Co-movements of many macro variables in the economic cycle. Business cycles are recurring but not periodic. Persistence of economic activity *Sources of *Mexican economic cycles. In order to identify the possible sources of business cycles in Mexico, 4 periods were examined. The first period examined, from 1970 to 1981, was characterized by a strategy of import substitution, increasing economic distortions, particularly in the financial sectors, restrictions on foreign direct investment, and on domestic and international investment. external imbalances. In response to the low growth rates of the early 1970s, the Mexican government implemented expansionary fiscal policies. This accelerated inflation, appreciated the local currency in real terms, and real interest rates were kept artificially low.