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Trade liberalization and the balance of payments constraint with intermediate imports: the case of Mexico revisited

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  • Robert A. Blecker
  • Carlos A. Ibarra

Abstract

Previous studies have found that a tightening of the balance of payments (BP) constraint can explain the slowdown in Mexico’s growth after its trade liberalization in the late 1980s. This paper develops a disaggregated model of the BP constraint with two types of exports (manufactured and primary commodities) and two types of imports (intermediate and final goods). Econometric estimates (including tests for structural breaks) show that the BPequilibrium growth rate did not fall, but instead rose in the post-liberalization period, so this model cannot account for the country’s growth slowdown. Instead, the analysis points to the need to consider the real exchange rate as well as internal obstacles and policies.

Suggested Citation

  • Robert A. Blecker & Carlos A. Ibarra, 2013. "Trade liberalization and the balance of payments constraint with intermediate imports: the case of Mexico revisited," Working Papers 2013-02, American University, Department of Economics.
  • Handle: RePEc:amu:wpaper:2013-02
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Robert A. Blecker, 2015. "International Trade and Development," Working Papers 2015-07, American University, Department of Economics.
    3. Carlos A. Ibarra, 2014. "Trade, investment, and capital flows:Mexico's macroeconomic adjustment to the Great Recession," Working Paper Series Sobre México 2014002, Sobre México. Temas en economía.
    4. 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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