Abstract

MARTINEZ HERNANDEZ, Francisco A.  and  CONTRERAS CLEOFAS, Omar. Determinants, size and evolution of the domestic market in Mexico and its macroeconomic implications for economic growth, 1970-2017. El trimestre econ [online]. 2020, vol.87, n.345, pp.133-169.  Epub Dec 09, 2020. ISSN 2448-718X.  https://doi.org/10.20430/ete.v87i345.940.

This document investigates determinants, size and evolution of the domestic market (DM) in Mexico from 1970 to 2017. We use the System of National Accounts of INEGI to propose a new methodology for the estimation of the DM. Subsequently, we analyze the macroeconomic implications associated with the evolution of the DM’s components from a demand side approach. Firstly, we find that the high import coefficients have tended to reduce the main components of the DM. Secondly, from the perspective of income generation, we find econometric evidence that suggests that the total wage bill (TWB) Granger-causes productivity at the macroeconomic level, therefore, an excessive growth of the gross operating surplus (GOS) has tended to shrink the potential of the DM through the reduction of the TWB in the national income. Finally, we find econometric evidence that there was a crowding-in effect of public spending and investment towards private investment in the Mexican economy during the studied period.

Keywords : Determinants and evolution of the domestic market; excessive growth of the GOS; contraction of the domestic market; crowding-in effect; error correction models.

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