Structural change, the real exchange rate and the balance of payments in Mexico, 1960–2012

Abstract

This paper estimates a structural model of the balance of payments, with disaggregated exports (manufactures and other) and imports (final and intermediate), and a reduced form model of the trade balance for the Mexican economy. The analysis identifies structural changes in the composition of Mexico's trade and the parameters that affect it across five subperiods marked by statistical breakpoints. The results indicate that a tightening of the balance-of-payments constraint may account for the post-liberalization slowdown in Mexico's growth only during certain subperiods, and that the impact of real exchange rate changes on the trade balance has diminished, most likely as a result of the increasing integration of export industries into global supply chains. The results also suggest an asymmetry, whereby a country cannot sustain growth above the rate consistent with balance-of-payments equilibrium, as expected, but it can grow persistently below that rate when other constraints are more binding.

Impact of International Oil Price on Energy Conservation and Emission Reduction in China

“…On the other hand, we based our work on a lot of scholarly research on the influence of international oil prices on the macroeconomy in China [20][21][22][23][24][25][26], analyzing the indirect influence of international oil prices on the energy consumption structure in China. As China entered the WTO, the economic development in China has been gradually geared to the international level, and the international oil price influences the total energy consumption and its consumption structure through exchange rates.…”

The process of endogenous liquidity in developing economies: the case of Mexico*

“…The Mexican economy is unable to self-finance its development because an expansion cannot be sustained through national credit without proportional responses of the interest rate and the rate of exchange. As noted by Ibarra and Blecker (2014), GDP growth in Mexico was considerably below the BoP-constrained growth estimate from 1994 to 2000, and it has been moderately lower post 2000, suggesting 'other' constraints on growth. We argue, as peso credit rises in an expansion, the demand for US$ reserves by the banking system puts upward pressure on the rate of interest, creating a short-term (cyclical) constraint on growth akin to Thirlwall's law.…”

“…In the case of Mexico, given that the export sector uses a significant level of imported intermediate goods, much of the recent literature evaluating BoP-constrained growth has utilized a multi-sector analysis; however, the results have been inconsistent (see, for example, Gouvêa and Lima 2010;Ibarra and Blecker 2014;Araujo et al 2016). Blecker and Ibarra (2014) suggest that the dramatic structural changes in the Mexican economy over the past 40-50 years provides an explanation for the inconsistent results. When testing for the underlying elasticities of exports and imports, they found several structural breaks in the data, suggesting five distinct periods of growth, with some periods exhibiting stronger connections to BoP-constrained growth, and other periods less so.…”

“…8. Ibarra and Blecker (2014) suggested some of the 'other factors' include a slow-down in US growth and rising competition from Chinese exports. 9.…”

The role of intermediate inputs in a multisectoral balance-of-payments-constrained growth model: the case of Mexico

“…The fact that Mexican exports are highly dependent on foreign content of exports has been highlighted by some authors as Moreno-Brid et al (2005) and Ibarra and Blecker (2016). One of the striking aspects of this arrangement is that the exports of final goods require massive imports of intermediate goods, giving rise to the question of whether such a strategy is harmful to growth under a BoP constraint.…”