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Evidencia empirica sobre deuda externa, inversion, y crecimiento en Mexico, 1980-2003
[Empirical evidence on foreign debt, investment, and growth in Mexico, 1980-2003]

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Author Info

  • Flores Prieto, Pedro
  • Fullerton, Thomas M., Jr.
  • Andrade Olivas, Cesar

Abstract

Under some conditions, it is possible that foreign debt can cause fixed investment in a country to decline. Under those circumstances, economic growth will turn negative. This theoretical possibility is known as the debt overhang hypothesis. This study investigates the debt overhang hypothesis for Mexico between 1980 and 2003. Parameter estimation results offer partial empirical evidence in favor of this hypothesis. Simulation results exhibit a high degree of correlation with actual sample data.

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File URL: http://mpra.ub.uni-muenchen.de/9497/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9497.

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Date of creation: Apr 2007
Date of revision: Apr 2007
Publication status: Published in Analisis Economico 50.22(2007): pp. 149-171
Handle: RePEc:pra:mprapa:9497

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Keywords: Foreign debt; growth; applied econometrics; Mexico;

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References

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  1. Michael Hutchison & Ilan Noy (Neuberger), 2002. "Sudden stops and the Mexican wave: currency crises, capital flow reversals and output loss in emerging markets," Pacific Basin Working Paper Series 2002-03, Federal Reserve Bank of San Francisco.
  2. Henry, Peter B. & Arslanalp, Serkan, 2003. "Is Debt Relief Efficient?," Research Papers 1837, Stanford University, Graduate School of Business.
  3. Snyder, Christopher M., 1998. "Loan Commitments and the Debt Overhang Problem," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 33(01), pages 87-116, March.
  4. Edward E. Leamer, 1982. "Let's Take the Con Out of Econometrics," UCLA Economics Working Papers 239, UCLA Department of Economics.
  5. Lederman, Daniel & Menendez, Ana Maria & Perry, Guillermo & Stiglitz, Joseph, 2003. "Mexican investment after the Tequila crisis: basic economics, "confidence" effects or market imperfections?," Journal of International Money and Finance, Elsevier, vol. 22(1), pages 131-151, February.
  6. Mendoza, Enrique G. & Oviedo, P. Marcelo, 2006. "Public Debt, Fiscal Solvency, and Macroeconomic Uncertainty in Latin America: The Cases of Brazil, Colombia, Costa Rica, and Mexico," Staff General Research Papers 12700, Iowa State University, Department of Economics.
  7. Jeffrey Sachs & Harry Huizinga, 1987. "U.S. Commercial Banks and the Developing Country Debt Crisis," NBER Working Papers 2455, National Bureau of Economic Research, Inc.
  8. Thomas M. Fullerton, Jr. & W. Charles Sowyer & Richard L. Sprinkle, 1997. "Functional form for United States-México trade equations," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 12(1), pages 23-35.
  9. Bulow, J. & Rogoff, K., 1988. "Sovereign Debt: Is To Forgive To Forget?," Working papers 8813, Wisconsin Madison - Social Systems.
  10. Thomas M Fullerton Jr & Richard L Sprinkle, 2004. "Latin American Progress under Structural Reform," Development and Comp Systems 0408012, EconWPA.
  11. Thomas M. Fullerton, Jr., 1999. "Inflationary pressure determinants in México," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 14(1), pages 33-51.
  12. Barry Eichengreen, 2003. "Restructuring Sovereign Debt," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 75-98, Fall.
  13. Warner, Andrew M, 1992. "Did the Debt Crisis Cause the Investment Crisis?," The Quarterly Journal of Economics, MIT Press, vol. 107(4), pages 1161-86, November.
  14. Carl F. Christ, 1993. "Assessing applied econometric results," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 71-94.
  15. Thomas Fullerton, 1998. "Empirical models for secondary market debt prices," Applied Economics Letters, Taylor & Francis Journals, vol. 5(6), pages 393-395.
  16. Husain, Aasim M, 1997. "Domestic Taxes and the External Debt Laffer Curve," Economica, London School of Economics and Political Science, vol. 64(255), pages 519-25, August.
  17. Warner, Andrew M., 1994. "Mexico's investment collapse: debt or oil?," Journal of International Money and Finance, Elsevier, vol. 13(2), pages 239-256, April.
  18. Kraay, Aart & Nehru, Vikram, 2004. "When is external debt sustainable?," Policy Research Working Paper Series 3200, The World Bank.
  19. Claessens, Stijn, 1990. "The debt laffer curve: Some estimates," World Development, Elsevier, vol. 18(12), pages 1671-1677, December.
  20. Sachs, Jeffrey, 1986. "Crédito Internacional: Aspectos teóricos," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 1(2), pages 219-254.
  21. Deirdre N. McCloskey & Stephen T. Ziliak, 1996. "The Standard Error of Regressions," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 97-114, March.
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