12 official national account items from identity<sup>(1) were employed, and therefore</sup> the indirect **as** well as direct measure of<sup>private saving (see section 1) are</sup> identical. All nominal variables in identity<sup>(2) not included in identity (1)</sup> were deflated by the GDP deflator. All saving<sup>rates are calculated in both</sup> current and 1980 pesos. Data sources and adjustment<sup>procedures are described</sup> below.

National Account (NAI Aagregates. The data<sup>source</sup><sup>**is**INEGI (National</sup> Institute of Statistics) and corresponds to<sup>gross aggregate investment, i.e.,</sup> includes inventory accuaulation. INEGI reports<sup>the series in current pesos</sup> and in constant pesos of 1980.

Balance of Payments (SOP) AQgreqates. The<sup>principal BOP data source is</sup> Bank of Mexico. However, the resource balance employed<sup>in identity (2) is a</sup> NA aggregate. The source for the stock<sup>of foreign private assets is Brideau,</sup> Eggerestedt and van Wijubergen (1991). The<sup>current account figures are based</sup> on revised, but yet unofficial, estimates of worker's<sup>remittances prior to</sup> 1988 (see Table 1).

Net other factor services (NFS) was obtained<sup>as follows:</sup>

- (8) NFS - - [CACC - iFo . iDn + _(X-X))_

- where: CACC is the current account<sup>adjusted for estimated worker's</sup> remittances

- iFo is the official figure of interest retained<sup>abroad</sup> iDn is nominal interest on foreign debt<sup>(net of central bank</sup> reserves)

- M-X is the BOP trade deficit

All flow variables originally in US dollars<sup>were converted to nominal</sup> pesos employing the average commercial exchange<sup>ra.te ("de flotacion controlada</sup> de equilibrio") except for the resource balance<sup>which was available in pesos</sup> from national accounts source and interest<sup>payments/receipts.</sup> The terms iDpr and iDpu in identity (2) were<sup>obtained multiplying the</sup> share of private sector/public sector foreign debt in total foreign debt by the term iD. The terms iF and iD (real foreign interest payments/receipts) were calculated as the product of: the estimated<sup>real interesc rates (see</sup> equations (t) and (4) in subsection 2.2.2),<sup>the beginning of period debt/asset</sup> stocks measiured in US dollars and the beginning<sup>of period commercial exchange</sup> rate.

Fisel Accounts (FA) Aggregates. The<sup>principal</sup> data source for FA is Bank of Mexico. However, current government<sup>expenditures (excluding interest)</sup> employed in identity (2) is a NA aggregate. Domestic<sup>debt stocks correspond</sup> to the non-financial public sector consolidated<sup>with the Bank of Mexico and</sup> the Development Banks and is reported in the<sup>1990 Annual Report of the Bank of</sup> Mexico ("Deuda Consolidada con Banco de Mexico").<sup>Prior to 1983 this measure</sup> was not available and so we employed the consolidated<sup>debt of the non-</sup> financial public sector and all the financial system<sup>("metodologia</sup> consolidada").

Domestic real interest payments and the inflation<sup>tax were estimated</sup> mutiplying real interest rates, obtained<sup>following the procedure described in</sup> subsectio 2.2.2., by the beginning of the month<sup>stocks of debt and base</sup> money. Annual eo1 interest payments are then obtained<sup>adding up monthly</sup> interest pAyments. Lack of monthly data impeded performing the same procedure with foreign public debt. The annual nominal interest rate on base money (equation (7)) was estimated as the ratio of interest paid by the Bank of Mexico (accumulated to December) and the average<sup>annual stock of base money.</sup> The monthly rate was the corresponding cumulative<sup>monthly rate that yielded</sup>