GDP Growth, Potential Output, and Output Gaps in Mexico

May 1, 2005

Preview Citation

Format: Chicago

Ebrima A Faal. GDP Growth, Potential Output, and Output Gaps in Mexico, (USA: International Monetary Fund, 2005) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Inflation, Output gap, Potential output, Production growth, Total factor productivity

Keywords: Production function, Real GDP, TFP growth, WP

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2005/093
Stock No:

WPIEA2005093
ISBN:

9781451861129
ISSN:

1018-5941

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