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Balance-of-payments constrained economic growth: the case of Mexico

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  • J.-C. MORENO-BRID

    (Harvard University)

Abstract

An analytical model for balance-of-payment constraints is developed to analyse the economic crisis which swept the entire Mexican region during the early 1980s. Analytical results suggest that a modification of the long-term income multipliers of the proposed framework may be effected by implementing a long-term constant ratio of the current account to nominal gross domestic product. It is further shown that Mexico's economic instability was largely caused by the inadequacy of foreign exchange resources necessary in driving domestic growth.

Suggested Citation

  • J.-C. Moreno-Brid, 1998. "Balance-of-payments constrained economic growth: the case of Mexico," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 51(207), pages 413-433.
    • Handle: RePEc:psl:bnlaqr:1998:43
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/10604/10488
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    References listed on IDEAS

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    Cited by:

    1. Joerg Mayer, 2017. "How Could the South Respond to Secular Stagnation in the North?," The World Economy, Wiley Blackwell, vol. 40(2), pages 314-335, February.
    2. Blecker, Robert A. & Ibarra, Carlos A., 2013. "Trade liberalization and the balance of payments constraint with intermediate imports: The case of Mexico revisited," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 33-47.
    3. Penelope Pacheco-Lopez & A.P. Thirlwall, 2005. "Trade Liberalisation, the Balance of Payments and Growth in Latin America," Studies in Economics 0505, School of Economics, University of Kent.
    4. Carlos A. Ibarra & Robert A. Blecker, 2016. "Structural change, the real exchange rate and the balance of payments in Mexico, 1960–2012," Cambridge Journal of Economics, Oxford University Press, vol. 40(2), pages 507-539.
    5. Robert A. Blecker, 2006. "Macroeconomic and Structural Constraints on Export-Led Growth in Mexico," Working Papers 2006-05, American University, Department of Economics.
    6. Robert Blecker, 2007. "External Shocks, Structural Change, and Economic Growth in Mexico, 1979-2006," Working Papers wp157, Political Economy Research Institute, University of Massachusetts at Amherst.
    7. Maja Kadievska-Vojnovic & Danica Unevska, 2007. "Price and Income Elasticities of Export and Import and Economic Growth in the case of the Republic of Macedonia," Working Papers 2007-01, National Bank of the Republic of North Macedonia.
    8. Anthony Philip Thirlwall, 2012. "Balance of Payments Constrained Growth Models: History and Overview," Palgrave Macmillan Books, in: Elias Soukiazis & Pedro A. Cerqueira (ed.), Models of Balance of Payments Constrained Growth, chapter 1, pages 11-49, Palgrave Macmillan.
    9. Civcir, Irfan & Panshak, Yohanna & Ozdeser, Huseyin, 2021. "A multi-sectoral balance of payments constrained growth approach with intermediate imports: The case of Nigeria," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 240-250.
    10. Penélope Pacheco‐López, 2005. "Foreign Direct Investment, Exports and Imports in Mexico," The World Economy, Wiley Blackwell, vol. 28(8), pages 1157-1172, August.
    11. A. P. Thirlwall, 2013. "Economic Growth in an Open Developing Economy," Books, Edward Elgar Publishing, number 15208.
    12. Robert A. Blecker, 2009. "Long-Run Growth in Open Economies: Export-Led Cumulative Causation or a Balance-of-Payments Constraint?," Working Papers 2009-23, American University, Department of Economics.
    13. Garcimartin, Carlos & Kvedaras, Virmantas & Rivas, Luis, 2016. "Business cycles in a balance-of-payments constrained growth framework," Economic Modelling, Elsevier, vol. 57(C), pages 120-132.
    14. Pennelope Pacheco-Lopez & Anthony P. Thirlwall, 2004. "Trade liberalisation in Mexico: rhetoric and reality," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 57(229), pages 141-167.
    15. Penelope Pacheco-López, 2004. "Does The Impact of Trade Liberalisation on Exports, Imports, the Balance of Payments and Growth: the Case of Mexico," Studies in Economics 0401, School of Economics, University of Kent.
    16. Leon Podkaminer, 2017. "“Thirlwall’s Law” reconsidered," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 44(1), pages 29-57, February.

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    More about this item

    Keywords

    Economics; Research and Development in the Social Sciences and Humanities; Models; Mexico;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • G01 - Financial Economics - - General - - - Financial Crises

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