IDEAS home Printed from https://ideas.repec.org/p/fip/fedmem/108.html
   My bibliography  Save this paper

NAFTA and Mexican development

Author

Listed:
  • Nancy L. Stokey

Abstract

Using a calibrated growth model, the dynamic effects of NAFTA on Mexican development are studied. Two scenarios are analyzed. In the first, NAFTA is assumed to stimulate inflows of physical capital into Mexico. These inflows reduce the interest rate and raise the wage rates for both skilled and unskilled labor. The skilled wage rises more sharply, however, increasing the skill premium and rapidly accelerating the accumulation of human capital. In the second scenario, NAFTA is assumed to have the effect of fully integrating Mexico with the U.S. and Canada. Integration also reduces the interest rate and raises both wage rates in Mexico, but in this case the skill premium falls and human capital accumulation speeds up only a little. The welfare gains are large in both cases.

Suggested Citation

  • Nancy L. Stokey, 1996. "NAFTA and Mexican development," Discussion Paper / Institute for Empirical Macroeconomics 108, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmem:108
    as

    Download full text from publisher

    File URL: http://minneapolisfed.org/research/common/pub_detail.cfm?pb_autonum_id=106
    Download Restriction: no
    File URL: http://minneapolisfed.org/research/DP/DP108.pdf
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedmem:108. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jannelle Ruswick (email available below). General contact details of provider: https://edirc.repec.org/data/cfrbmus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.