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A Panel Unit Root and Panel Cointegration Test of the Complementarity Hypothesis in the Mexican Case: 1960–2001

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  • Miguel Ramirez

Abstract

Using panel data, this paper tests whether public and private capital have a positive and significant effect on aggregate output and labor productivity for Mexico during the 1960–2001 period. The richer information set made possible by the sectorial data enables this study to utilize the methodologically sound “group-mean” fully modified ordinary least squares (FMOLS) procedure developed by Pedroni to generate consistent estimates of the relevant panel variables in the cointegrated production (labor productivity) function. The results suggest that, in the long run, changes in the stocks of public and private capital and the economically active population (EAP) have a positive and economically significant effect on output ( and labor productivity). The period is also broken down into two sub-periods: 1960–1981 (state-led industrialization) and 1982–2001 (neoliberal model). The estimate for the public capital variables clearly shows that it had a relatively more important economic effect during the earlier state-led period. Copyright International Atlantic Economic Society 2007

Suggested Citation

  • Miguel Ramirez, 2007. "A Panel Unit Root and Panel Cointegration Test of the Complementarity Hypothesis in the Mexican Case: 1960–2001," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 35(3), pages 343-356, September.
    • Handle: RePEc:kap:atlecj:v:35:y:2007:i:3:p:343-356
    DOI: 10.1007/s11293-007-9078-6
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    More about this item

    Keywords

    Fully modified ordinary least squares (FMLOS); Panel unit roots; Panel cointegration test; Mexican labor productivity; O10; O40; O50;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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