What is it about?
This research investigates if external debt-economic growth relationship is like a Laffer curve in Mexico along 1970-2017. Results confirm the hypothesis and suggest that levels of debt/GDP below to 24% enhance growth, while higher ratios discourage it. Direction of results are similar for public debt. Findings are compatible with empirical performance of this relationship. Recommendations highlight that Mexico should reduce the weight of its external debt to recover the path of steady-state growth. As main conclusion, external debt may be factor of the low growth of the Mexican economy in the last forty years.
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Why is it important?
This proposal is original due to the period of analysis and the use of diagnostics of regression that allow to understand the burden of debt in Mexico.
Perspectives
I hope that reading this work will allow us to make better decisions about the level of debt that the Mexican economy and economies like Mexico can support, in such a way that it allows for ideal growth.
Dr. Vicente German-Soto
Autonomous University of Coahuila
Read the Original
This page is a summary of: La curva de Laffer en la relación deuda externa-crecimiento económico de México, 1970-2017, Revista Mexicana de Economía y Finanzas, April 2020, Instituto Mexicano de Ejecutivos de Finanzas, A.C. (IMEF),
DOI: 10.21919/remef.v15i2.395.
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