Introduction

In the mid-1970s unemployment, inflation and monetary disturbances were dominant forces in the Mexican economy. Beginning in late 1977, however the situation drastically changed.

Economic Changes

The discovery of enormous oil fields, combined with a structural and social factors, vastly improved the nation's prospects and in terms of business cycles, its economy moved from trough to peak.

Model and Analysis

In assessing these changes, Dr Carrada constructs a macro-econometric model- based on the monetary approach to the balance of payments- to deal in the short-run with structural features of Mexico's economy.

He then applied his model to a variety of scenarios in order to explore the short-term dynamic impact of oil revenues on real incomes, prices, inflation, money, supply and balance of payments.

Theoretical and Empirical Evidence

Incorporating theoretical and empirical evidence of how expectations affect levels of economic activity and inflation, Dr Carrada's model is applicable also to the conditions of other oil-rich developing countries.