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Structural Change, the Real Exchange Rate, and the Balance of Payments in Mexico, 1960-2012

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  • Robert Blecker

Abstract

This paper estimates a structural model of the balance of payments, with disaggregated exports (manufactured and non-manufactured) and imports (final and intermediate goods), and a reduced form model of the trade balance for the Mexican economy. The analysis identifies several structural breaks, implying a division of the entire sample period into five phases. The results indicate that a tightening of the balance-of-payments constraint may account for the slowdown in Mexico’s growth only during certain subperiods of the post-liberalization era, and that the impact of real exchange rate changes on the trade balance has diminished as a result of the increasing integration of export industries into global supply chains. The results also suggest an important asymmetry, whereby a country can grow below the rate consistent with balance-of-payments equilibrium when other constraints are more binding, but cannot sustain growth above that rate. JEL classification: F43, F14, E12, O24

Suggested Citation

  • Robert Blecker, 2014. "Structural Change, the Real Exchange Rate, and the Balance of Payments in Mexico, 1960-2012," Working Papers 2014-01, American University, Department of Economics.
  • Handle: RePEc:amu:wpaper:2014-01
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    References listed on IDEAS

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    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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