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Potential GDP and Total Factor Productivity: Recessions and Expansions in Mexico

Author

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  • Ernesto Acevedo Fernández

    () (Profesor, División de Estudios de Posgrado, Facultad de Economía, UNAM.)

Abstract

Potential GDP and the NAIRU of Mexico are estimated using a Cobb-Douglas production function combined with a Kalman filter, under the assumption of three different behaviors of total factor productivity. A growth accounting exercise is carried out to identify the factor contribution of labor and capital. Results show that during 2006-2007 potential growth of Mexico was between 3.7 and 4.3 per cent. The economic cycles experienced in Mexico are characterized, and its recessions and expansions are dated. During 1980-2007 economic recessions and expansions lasted on average 7.0 and 13.3 quarters, respectively; that means recessions in Mexico are 121.1 per cent longer than in the US, while expansions are 46.8 per cent shorter. As a consequence of economic recessions, Mexico lost 16.1 per cent of its gdp and more than 1.2 million workers were fired.

Suggested Citation

  • Ernesto Acevedo Fernández, 2009. "Potential GDP and Total Factor Productivity: Recessions and Expansions in Mexico," Economía Mexicana NUEVA ÉPOCA, , vol. 0(2), pages 175-219, July-Dece.
  • Handle: RePEc:emc:ecomex:v:18:y:2009:i:2:p:175-219
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    More about this item

    Keywords

    Potential GDP; output gap; growth accounting; economic cycles; expansions; recessions.;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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