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Endogenous growth and economic capacity: Theory and empirical evidence for the NAFTA countries

Author

Listed:
  • Ignacio Perrotini-Hernandez

    (Autonomous National University of Mexico (UNAM))

  • Juan Alberto Vazquez-Munoz

    (The Meritorious Autonomous University of Puebla (BUAP))

Abstract

The paper sheds light on the relevance of economic capacity utilisation, capital accumulation and effective demand for the endogeneity of the natural growth rate with respect to normal, depressive and expansive growth regimes. Apart from contributing to fill this theoretical gap, a new model is developed for estimating the elasticity of the natural growth rate, with a specific focus on Canada, Mexico and the United States, throughout the pre-NAFTA and post-NAFTA periods. It is shown that growth regimes are related to the utilisation of economic capacity, while the elasticities of the expansive and depressive natural rates of growth vis-Ã -vis the normal rate are related to effective demand. It is also found that the normal, depressive and expansive natural rates of growth decreased since the inception of NAFTA, due to the concomitant decline in the growth rate of economic capacity.

Suggested Citation

  • Ignacio Perrotini-Hernandez & Juan Alberto Vazquez-Munoz, 2017. "Endogenous growth and economic capacity: Theory and empirical evidence for the NAFTA countries," PSL Quarterly Review, Economia civile, vol. 70(282), pages 247-282.
    • Handle: RePEc:psl:pslqrr:2017:32
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/14006/13761
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    References listed on IDEAS

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    More about this item

    Keywords

    endogenous growth; empirical studies of economic growth; economic capacity;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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