TY - JOUR
T1 - Government spending, taxation, and oil revenues in Mexico
AU - Tijerina-Guajardo, José A.
AU - Pagán, José A.
PY - 2003/2
Y1 - 2003/2
N2 - The paper analyzes the intertemporal relationship between oil duties, taxes, government spending, and GDP in Mexico during the 1981-98 period. The results from estimating a VAR model, impulse response functions. and variance decompositions on the quarterly series of taxes, government spending, oil duties, and GDP suggest that there seems to be a substitution effect between oil duties and tax revenues, and that tax revenues are not able to absorb temporary decreases in oil duties. Also, increases in tax revenue might lead to increasing government spending, but short-run increases in government spending are not likely to lead to political pressure to reduce the expected budget deficit via increased taxation and/or oil revenues. Lastly. GDP is not stimulated in the short-run by temporary increases in government spending and, thus, stabilization measures adopted in recent years to reduce the size of the government are not likely to significantly undermine GDP growth.
AB - The paper analyzes the intertemporal relationship between oil duties, taxes, government spending, and GDP in Mexico during the 1981-98 period. The results from estimating a VAR model, impulse response functions. and variance decompositions on the quarterly series of taxes, government spending, oil duties, and GDP suggest that there seems to be a substitution effect between oil duties and tax revenues, and that tax revenues are not able to absorb temporary decreases in oil duties. Also, increases in tax revenue might lead to increasing government spending, but short-run increases in government spending are not likely to lead to political pressure to reduce the expected budget deficit via increased taxation and/or oil revenues. Lastly. GDP is not stimulated in the short-run by temporary increases in government spending and, thus, stabilization measures adopted in recent years to reduce the size of the government are not likely to significantly undermine GDP growth.
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U2 - 10.1111/1467-9361.00182
DO - 10.1111/1467-9361.00182
M3 - Article
AN - SCOPUS:0037326174
SN - 1363-6669
VL - 7
SP - 152
EP - 164
JO - Review of Development Economics
JF - Review of Development Economics
IS - 1
ER -