Stationarity, structural breaks, and economic growth in Mexico: 1895-2008

This paper shows that the evolution of the level of Mexico real and real per capita output between 1895 and 2008 can be adequately described through a trendstationary model, affected by 4 structural breaks, which occurred at dates that seem to coincide with domestic institutional arrangements, wars, and financial and economic crises. These changes are modeled through logistic smooth transition functions, in which transition periods are endogenously estimated. In terms of growth rates, our results indicate that for Mexico real and real per capita GDP, there are four stationary growth paths, separated by three transition periods. For instance, for real GDP we identify the following stationary growth paths: 1895-1924, 1935-1952, 1956-1978, and 1989-2008, separated by three transition periods: 1925-1934, 1953-1955, and 1979-1988.