A model of economic growth constrained by the balance of payments - Evidence for Mexico, 1940-2000

Using a stochastic specification that emphasises the role of the ratio of exports/imports income elasticities, this paper applies the balance-of-payments constraint model to the analysis of Mexico's economic growth from 1940 to 2000. The econometric results show that while the value of this ratio was 1.74 from 1940 to 1981, it was just only 0.94 from 1982 to 2000. Thus, it is expected that the proportion between Mexican and rest of the world-particularly U. S.-economic growth rate will reduce during the next few years.