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Slow Growth, Trade Liberalisation and the Mexican Disease: A medium-term macroeconomic model with an application to Mexico

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  • Carlos Ibarra

Abstract

The purpose of this paper is to analyse Mexico's medium-term macroeconomic outlook, from the vantage point of the country's recent development. The analysis is carried out within a formal model for the determination of the rates of employment and inflation under conditions of external and internal balance. In equilibrium, the real wage and the rates of employment and inflation depend inter alia on the level of labour productivity, the ratio of foreign debt to domestic output, and the foreign trade regime. Econometric tests based on Mexican data support the model's basic postulates and, in addition, reveal the presence of structural change, linked to trade reform, in the trade balance and the manufactures' productivity growth equations. The macroeconomic implications of such parameter changes are discussed with the help of the analytical model developed.

Suggested Citation

  • Carlos Ibarra, 2003. "Slow Growth, Trade Liberalisation and the Mexican Disease: A medium-term macroeconomic model with an application to Mexico," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(3), pages 269-292.
    • Handle: RePEc:taf:irapec:v:17:y:2003:i:3:p:269-292
    DOI: 10.1080/0269217032000090487
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    References listed on IDEAS

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    Cited by:

    1. Ibarra, Carlos A., 2011. "Import elasticities and the external constraint in Mexico," Economic Systems, Elsevier, vol. 35(3), pages 363-377, September.
    2. Carlos A. Ibarra, 2004. "Capital Flows, Exchange Rate Regime, and Macroeconomic Performance in Mexico," WIDER Working Paper Series RP2004-27, World Institute for Development Economic Research (UNU-WIDER).

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