THE MACRO-PRICES (EXCHANGE RATE AND INTEREST RATE) AND THE MEXICAN AGRICULTURAL SECTOR FROM 1988 TO 1995
This study presents the relationship between the overvalued Mexican peso and high interest rates, with sectorial Gross National Product (GNP), trade account balances and defaulted agricultural credit loans, covering 1988 through 1995. The methodology was based on Classic Economic Theory and correlation coefficients. Results indicated that an overvalued peso together with high interest rates contributed to trade account deficits, low economic growth (as measured by sectorial GNP) as well as an increase in loan defaults. The foreign exchange adjustment of December 1994, made Mexican tradeable goods competitive, mainly those produced from the industrial and agricultural sectors. In the agricultural sector the increase in competitiveness meant an increment in exports and a decrement of imports. Thus, in 1995, the agricultural trade balance had a surplus. However, that year the agricultural gross product did decrease, due among other things, to high interest rates. Bank loans defaults increased year after year including 1995. The conclusion of this study is that distortions in macro-prices should be avoided in order to enhance economic growth.
| Main Authors: | , , , , |
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| Format: | Digital revista |
| Language: | spa |
| Published: |
Colegio de Postgraduados
1997
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| Online Access: | https://www.agrociencia-colpos.org/index.php/agrociencia/article/view/1518 |
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