Potential GDP and Total Factor Productivity: Recessions and Expansions in Mexico

Ernesto Acevedo Fernández ()
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Ernesto Acevedo Fernández: Profesor, División de Estudios de Posgrado, Facultad de Economía, UNAM.

Economía Mexicana NUEVA ÉPOCA, 2009, vol. XVIII, issue 2, 175-219

Abstract: Potential GDP and the NAIRU of Mexico are estimated using a Cobb-Douglas production function combined with a Kalman filter, under the assumption of three different behaviors of total factor productivity. A growth accounting exercise is carried out to identify the factor contribution of labor and capital. Results show that during 2006-2007 potential growth of Mexico was between 3.7 and 4.3 per cent. The economic cycles experienced in Mexico are characterized, and its recessions and expansions are dated. During 1980-2007 economic recessions and expansions lasted on average 7.0 and 13.3 quarters, respectively; that means recessions in Mexico are 121.1 per cent longer than in the US, while expansions are 46.8 per cent shorter. As a consequence of economic recessions, Mexico lost 16.1 per cent of its gdp and more than 1.2 million workers were fired.

Keywords: Potential GDP; output gap; growth accounting; economic cycles; expansions; recessions. (search for similar items in EconPapers)
JEL-codes: E32 O47 (search for similar items in EconPapers)
Date: 2009
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