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External Shocks, Structural Change, and Economic Growth in Mexico 1979–2006

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  • Robert A. Blecker

Abstract

This paper finds that shocks to net financial inflows, world oil prices, the U.S. growth rate, and the lagged real exchange rate explain most of the fluctuations in Mexico’s annual growth since 1979. The paper also estimates how the effects of these external constraints have changed since Mexico’s liberalization policies of the late 1980s and the formation of NAFTA in 1994. Estimates of an investment function and other tests show that growth drives investment but not conversely, in the short run. Inflows of foreign direct investment have positive effects on investment, but the coefficients are small and not always significant.

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File URL: http://w.american.edu/cas/economics/repec/amu/workingpapers/2008-04.pdf
File Function: First version, 2008
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Bibliographic Info

Paper provided by American University, Department of Economics in its series Working Papers with number 2008-04.

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Length: 37 pages
Date of creation: Jan 2008
Date of revision:
Handle: RePEc:amu:wpaper:0408

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Web page: http://www.american.edu/cas/economics/

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Keywords: Latin America; Mexico; external shocks; economic growth; investment; financial inflows;

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References

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  1. 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, Department of Economics, University of Kent.
  2. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
  3. Ebrima Faal, 2005. "Gdp Growth, Potential Output, and Output Gaps in Mexico," IMF Working Papers 05/93, International Monetary Fund.
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  5. Robert A. Blecker, 2006. "The Economic Consequences of Dollar Appreciation for US Manufacturing Investment: A Time-Series Analysis," Working Papers 2006-07, American University, Department of Economics.
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  16. Rudger Dornbusch & Ilan Goldfajn & Rodrigo O. Valdés, 1995. "Currency Crises and Collapses," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(2), pages 219-294.
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  19. Luis Miguel Galindo & Jaime Ros, 2008. "Alternatives to inflation targeting in Mexico," International Review of Applied Economics, Taylor & Francis Journals, vol. 22(2), pages 201-214.
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Cited by:
  1. Isaac Leobardo Sánchez Juárez, 2011. "Una interpretación sobre el bajo crecimiento económico en México," Estudios Regionales en Economía, Población y Desarrollo. Cuadernos de trabajo de la Universidad Autónoma de Ciudad Juárez. 1, Cuerpo Académico 41 de la Universidad Autónoma de Ciudad Juárez, revised 09 Dec 2012.

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