A Structural Fiscal Balance Rule for Mexico
This paper analyzes the convenience of adopting a structural fiscal balance rule in Mexico, and whether the necessary conditions exist in the country for the adoption of such a rule. Adjustments are made for cyclical factors and other sources of volatility, both on the revenue and the expenditure side, in order to estimate the structural fiscal balance and determine if an appropriate fiscal rule can be designed for Mexico's case. The analysis evaluates various possible oil production scenarios in Mexico and reaches the conclusion that adopting a rule that establishes a yearly structural fiscal surplus of 0.5 percent of GDP could be adequate to maintain sustainable levels of public debt.
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Format: | Discussion Papers & Presentations biblioteca |
Language: | English |
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Inter-American Development Bank
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Subjects: | Monetary Policy, Fiscal Policy, Public Expenditure, Government Revenue, E62 - Fiscal Policy, H60 - National Budget Deficit and Debt: General, Fiscal Policy, Fiscal Rules, Structural Fiscal Balance Rule, Oil Production, Oil Revenues, |
Online Access: | http://dx.doi.org/10.18235/0006966 https://publications.iadb.org/en/structural-fiscal-balance-rule-mexico |
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Summary: | This paper analyzes the convenience of adopting a structural fiscal balance rule in Mexico, and whether the necessary conditions exist in the country for the adoption of such a rule. Adjustments are made for cyclical factors and other sources of volatility, both on the revenue and the expenditure side, in order to estimate the structural fiscal balance and determine if an appropriate fiscal rule can be designed for Mexico's case. The analysis evaluates various possible oil production scenarios in Mexico and reaches the conclusion that adopting a rule that establishes a yearly structural fiscal surplus of 0.5 percent of GDP could be adequate to maintain sustainable levels of public debt. |
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