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Structural change, the real exchange rate and the balance of payments in Mexico, 1960–2012

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  • Carlos A. Ibarra
  • Robert A. Blecker

Abstract

This paper estimates a structural model of the balance of payments, with disaggregated exports (manufactures and other) and imports (final and intermediate), and a reduced-form model of the trade balance for the Mexican economy. The analysis identifies structural changes in the composition of Mexico’s trade and the parameters that affect it across five subperiods marked by statistical breakpoints. The results indicate that a tightening of the balance-of-payments constraint may account for the post-liberalisation slowdown in Mexico’s growth only during certain subperiods and that the impact of real exchange rate changes on the trade balance has diminished, most likely as a result of the increasing integration of export industries into global supply chains. The results also suggest an asymmetry, whereby a country cannot sustain growth above the rate consistent with balance-of-payments equilibrium, as expected, but it can grow persistently below that rate when other constraints are more binding.

Suggested Citation

  • 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.
  • Handle: RePEc:oup:cambje:v:40:y:2016:i:2:p:507-539.
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    File URL: http://hdl.handle.net/10.1093/cje/beu079
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    References listed on IDEAS

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    Cited by:

    1. repec:tei:journl:v:10:y:2017:i:3:p:80-89 is not listed on IDEAS
    2. Blecker, Robert A. & Moreno Brid, Juan Carlos & Salat, Isabel, 2017. "Trumping the NAFTA renegotiation An alternative policy framework for Mexican-United States cooperation and economic convergence," Sede Subregional de la CEPAL en México (Estudios e Investigaciones) 42579, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

    More about this item

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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