Growth, external debt, and the real exchange rate in Mexico, Issue 257Latin America and the Caribbean Country Department II, World Bank, 1989 - Debts, External - 30 pages Can external restraint and internal balance in Mexico be reconciled at savings and investment levels that allow satisfactory output growth? What role do fiscal policy, interest rates, oil prices, and exchange rates play? How would a cutoff from external capital markets affect output growth? This paper develops and uses an econometric model for Mexico to discuss these questions. |
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1.5 percent access to foreign aggregate demand aggregate expenditure aggregate supply August commodity market clearing commodity market equilibrium current account deficit current account target debt relief debt-output ratio decline demand for Mexican domestic debt domestic real interest economic elasticity empirical employment equation equilibrium inflation rate exchange rate misalignment external balance external debt fall financeable deficit fiscal deficits fiscal policy foreign capital markets foreign debt foreign financing government expenditure growth rate high real interest impact income effect increase inflation target inflation tax intermediate imports King-Watson macroeconomic targets Mexico nominal oil prices operational deficit percent of GDP percentage point period private investment private savings public investment public sector real depreciation real devaluation real exchange rate real growth real interest rates real rate relative price variable renewed access required deficit reduction revenue satisfactory output growth savings and investment scenario sexennio surplus tax credit three percent trade World Bank world interest rates