GDP Growth, Potential Output, and Output Gaps in Mexico

Ebrima Faal

No 05/93, IMF Working Papers from International Monetary Fund

Abstract: This paper analyzes the sources of Mexico's economic growth since the 1960s and compares various decompositions of historical growth into its trend and cyclical components. The role of the implied output gaps in the inflationary process is then assessed. Looking ahead, the paper presents medium-term paths for GDP based on alternative assumptions for productivity growth rates. The results indicate that the most important factor underlying the slowdown in output growth was a decline in trend total factor productivity growth. Economic policy reforms and the introduction of NAFTA may have raised trend productivity growth in recent years. Further increases in productivity growth would appear necessary, however, to raise medium-term growth.

Keywords: Economic growth; Mexico; Inflation; Production; Economic models (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2005-05-23
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