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Evidencia empirica sobre deuda externa, inversion, y crecimiento en Mexico, 1980-2003
[Empirical evidence on foreign debt, investment, and growth in Mexico, 1980-2003]

  • Flores Prieto, Pedro
  • Fullerton, Thomas M., Jr.
  • Andrade Olivas, Cesar

Under some conditions, it is possible that foreign debt can cause fixed investment in a country to decline. Under those circumstances, economic growth will turn negative. This theoretical possibility is known as the debt overhang hypothesis. This study investigates the debt overhang hypothesis for Mexico between 1980 and 2003. Parameter estimation results offer partial empirical evidence in favor of this hypothesis. Simulation results exhibit a high degree of correlation with actual sample data.

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File URL: http://mpra.ub.uni-muenchen.de/9497/1/MPRA_paper_9497.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9497.

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Date of creation: Apr 2007
Date of revision: Apr 2007
Publication status: Published in Analisis Economico 50.22(2007): pp. 149-171
Handle: RePEc:pra:mprapa:9497
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  1. Sachs, J. & Huizinga, H.P., 1987. "U.S. commercial banks and the developing-country debt crisis," Other publications TiSEM ada14007-7229-4f6d-a016-f, Tilburg University, School of Economics and Management.
  2. Warner, Andrew M, 1992. "Did the Debt Crisis Cause the Investment Crisis?," The Quarterly Journal of Economics, MIT Press, vol. 107(4), pages 1161-86, November.
  3. Deirdre N. McCloskey & Stephen T. Ziliak, 1996. "The Standard Error of Regressions," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 97-114, March.
  4. Thomas M Fullerton Jr & W Charles Sawyer & Richard L Sprinkle, 2004. "Functional Form for United States - Mexico Trade Equations," International Trade 0408001, EconWPA.
  5. Snyder, Christopher M., 1998. "Loan Commitments and the Debt Overhang Problem," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 33(01), pages 87-116, March.
  6. Thomas Fullerton, 1998. "Empirical models for secondary market debt prices," Applied Economics Letters, Taylor & Francis Journals, vol. 5(6), pages 393-395.
  7. Serkan Arslanalp & Peter Blair Henry, 2004. "Is Debt Relief Efficient?," NBER Working Papers 10217, National Bureau of Economic Research, Inc.
  8. Warner, Andrew M., 1994. "Mexico's investment collapse: debt or oil?," Journal of International Money and Finance, Elsevier, vol. 13(2), pages 239-256, April.
  9. Barry Eichengreen, 2003. "Restructuring Sovereign Debt," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 75-98, Fall.
  10. Thomas M. Fullerton, Jr., 1999. "Inflationary pressure determinants in México," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 14(1), pages 33-51.
  11. Enrique G. Mendoza & P. Marcelo Oviedo, 2009. "Public Debt, Fiscal Solvency and Macroeconomic Uncertainty in Latin America The Cases of Brazil, Colombia, Costa Rica and Mexico," Economía Mexicana NUEVA ÉPOCA, , vol. 0(2), pages 133-173, July-Dece.
  12. Claessens, Stijn, 1990. "The debt laffer curve: Some estimates," World Development, Elsevier, vol. 18(12), pages 1671-1677, December.
  13. Aart Kraay & Vikram Nehru, 2006. "When Is External Debt Sustainable?," World Bank Economic Review, World Bank Group, vol. 20(3), pages 341-365.
  14. Michael Hutchison & Ilan Noy (Neuberger), 2002. "Sudden stops and the Mexican wave: currency crises, capital flow reversals and output loss in emerging markets," Pacific Basin Working Paper Series 2002-03, Federal Reserve Bank of San Francisco.
  15. Bulow, J. & Rogoff, K., 1988. "Sovereign Debt: Is To Forgive To Forget?," Papers 411, Stockholm - International Economic Studies.
  16. Thomas M Fullerton Jr & Richard L Sprinkle, 2004. "Latin American Progress under Structural Reform," Development and Comp Systems 0408012, EconWPA.
  17. Edward E. Leamer, 1982. "Let's Take the Con Out of Econometrics," UCLA Economics Working Papers 239, UCLA Department of Economics.
  18. Lederman, Daniel & Menendez, Ana Maria & Perry, Guillermo & Stiglitz, Joseph, 2003. "Mexican investment after the Tequila crisis: basic economics, "confidence" effects or market imperfections?," Journal of International Money and Finance, Elsevier, vol. 22(1), pages 131-151, February.
  19. Husain, Aasim M, 1997. "Domestic Taxes and the External Debt Laffer Curve," Economica, London School of Economics and Political Science, vol. 64(255), pages 519-25, August.
  20. Carl F. Christ, 1993. "Assessing applied econometric results," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 71-94.
  21. Sachs, Jeffrey, 1986. "Crédito Internacional: Aspectos teóricos," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 1(2), pages 219-254.
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