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This paper analyzes the impact of the feedback relationship that exists between inflation, its uncertainty, and the economic growth of the two main Latin American economies. A Bivariate Generalized Autoregressive Conditional Heteroscedasticity model is developed, which also allows the identification of asymmetric impacts on the conditional volatility of the product and inflation, the sample period corresponds to January 1985 to June 2019. Additionally, causality tests are developed to identify the fulfillment of the main hypotheses raised. Among the main findings is the verification of the Friedman-Ball hypothesis for both countries in most of the lags. Regarding the second hypothesis, it is found that the central bank of Mexico has presented a stabilizing behavior, while in the Brazilian case an opportunistic behavior has been identified. In the third hypothesis, no causal relationship of inflationary uncertainty towards economic growth is identified, in the case of Mexico; while, in the case of Brazil, an ambivalent causality has been identified, regarding the number of lags. Finally, in the fourth hypothesis we find results that corroborate, mainly for both economies, a positive effect from inflation on economic growth. [ABSTRACT FROM AUTHOR]

The Mexican economy has moved to an outward growth model that has resulted in a spatial restructuring of manufacturing activities. This transformation has allowed the incorporation of the regional economy, in which the local and the global interact to promote the expansion and well-being of the localities. The general objective of this paper is to describe the performance of manufacturing in Mexico through its regional composition based on total factor productivity (TFP) in the period 1993-2018. The applied methodology is the Solow Residual model with a Cobb-Douglas production function with constant marginal returns to analyze the sources of growth. The results show regional asymmetries in TFP growth, on the one hand, the northern border and central-north regions register significant growth and, on the other, the central and southern regions have lagged due to inefficient performance that has resulted in a limited productivity performance of Mexican manufactures. [ABSTRACT FROM AUTHOR]

This paper studies the link between economic growth and state industrial capital stock accumulation using panel data techniques in the time period 1960-2012. The analysis is done in two moments: the age of national industrialization (1960-1982) and the structural reform era (1983-2012). The results point to a long-term relationship in both periods, but with a sign opposite of the expected sign in the latter, suggesting that the deceleration of industrial capital can explain the slowdown over the past three decades. This result is confirmed with the decline of manufacturing, as well as other economic indicators. The causality tests demonstrate two-way causality between the two variables, evincing a virtuous cycle between growth and accumulation. [ABSTRACT FROM AUTHOR]

Literature on education has focused on comparing student enrollment data, literacy rates, and education systems in developed and developing countries, disregarding the subject of quality in education. This is likely due to the failure to reach an agreement on how to measure it. This paper examines how education can contribute to an increased human capital possessed by labor force, so productivity can be enhanced, and production can be in balance. It also examines how education boosts the economic growth by means of innovation that education also promotes, and answers the question, whether or not quality in education has an influence on the economic growth? by using new methodologies to find a single way of measuring the quality in education in the United Mexican States, and its impact on the economic growth. [ABSTRACT FROM AUTHOR]

Adopting a legal definition of informality, this paper studies the causes of informality in general and with a particular application to Mexico. It starts with a discussion on the definition and measures of informality. It then argues and provides evidence that informality is not only a reflection of underdevelopment but may also be the source of further economic retardation. Next, the paper analyzes informality's main determinants, arguing that informality is not single-caused but results from the combination of poor public services, a burdensome regulatory regime, and weak monitoring and enforcement capacity by the state. This combination is especially explosive when the country suffers from low educational achievement and features demographic pressures and primary production structures. The paper then evaluates the empirical relevance of each determinant of informality to the specific case of Mexico. [ABSTRACT FROM AUTHOR]

This paper discusses the growth slowdown of the Mexican economy during the reform and post reform periods. It addresses four possible factors behind the growth deceleration. First, the role of international trade integration, showing that the trade policy reforms of the 1980s and 1990s were in fact very successful in enhancing export growth and trade openness but not in promoting a dynamic pattern of trade specialization. Second, the productivity growth slowdown, arguing that this should be seen as a consequence rather than a cause of the growth deceleration as the evolution of productivity growth is closely associated with the expansion of tertiary underemployment. Third, the discussion of the role of human capital formation suggests that educational and health indicators have been improving during the recent period, partly as a consequence of the demographic bonus, and cannot be held responsible for the fall in output per worker that has taken place since the early 1980s. Finally, the paper focuses on what it believes is the primary determinant of the growth slowdown, the low rate of physical capital accumulation. [ABSTRACT FROM AUTHOR]

Recent literature has empirically demonstrated that the real exchange rate is essential to explaining the economic evolution of developing countries. It has been empirically proven that the anti-inflation exchange rate policy implemented systematically in Mexico has constituted a major restriction on the country's economic growth, a restriction that has persisted throughout this entire time period, even through different monetary and exchange rate regimes. This paper estimates an svar (1950-2014) that shows how the continuous appreciation of the real exchange rate has curbed Mexico's economic growth capacity and had an impact on other macroeconomic balances. This alone could be considered a highly potent structural macroeconomic reform. [ABSTRACT FROM AUTHOR]

This paper shows that the evolution of the level of Mexico real and real per capita output between 1895 and 2008 can be adequately described through a trend stationary model, affected by 4 structural breaks, which ocurred at dates that seem to coincide with domestic institutional arrangements, wars, and financial and economic crises. These changes are modeled through logistic smooth transition functions, in which transition periods are endogenously estimated. In terms of growth rates, our results indicate that for Mexico real and real per capita GDP, there are four stationary growth paths, separated by three transition periods. For instance, for real GDP we identify the following stationary growth paths: 1895-1924, 1935- 1952, 1956-1978, and 1989-2008, separated by three transition periods: 1925-1934, 1953-1955, and 1979-1988. [ABSTRACT FROM AUTHOR]

This paper evaluates the importance of infrastructure on economic growth for the Mexican northern border municipalities. From the growth literature, we know that infrastructure, besides other factors, has been pointed out as a key factor in the long run perspectives of regional growth. Nevertheless, and within this thematic context, works that use a disaggregated analysis down to the level of the municipality are still scarce, which in the case of the northern border constitutes a scenario of much relevance given the development model adopted by the Mexican economy in recent decades. Empirical models results indicate that the municipalities of Piedras Negras, Nogales and Torreon maintain a positive relationship between physical infrastructure and growth. In the case of other municipalities like Tijuana, its elevated population growth inhibits a proper infrastructure allocation, although the positive effect induced by infrastructure on growth remains. [ABSTRACT FROM AUTHOR]

If finance is crucial to growth, as a large literature has demonstrated, then why is there wide variance in financial development across countries? Why have governments not put the appropriate policies into place to encourage the development of banks and securities markets? This paper addresses this question by exploring the development of the Mexican banking system from the 1880s to the present. It argues that the institutions that encourage financial development cannot be created at the stroke of a pen. Rather, the creation of institutions that encourage financial development are dependent upon other institutions that limit the authority and discretion of the government. In short, political institutions that constrain government are a necessary condition for economic growth. [ABSTRACT FROM AUTHOR]