Dynamic effect of legal complexity on the value added tax in Mexico

Javier Moreno (), Leovardo Mata (), Jaime Humberto Beltrán () and Griselda Dávila ()
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Javier Moreno: Universidad Panamericana
Leovardo Mata: Universidad Anáhuac México
Jaime Humberto Beltrán: Universidad Anáhuac México; Instituto Tecnológico Superior de Tantoyuca
Griselda Dávila: Universidad Panamericana

Economics Bulletin, 2025, vol. 45, issue 4, 1710 - 1722

Abstract: This paper studies legal complexity and its dynamic relationship with the Value Added Tax Law, from its original version published in 1978 to the current version. To this end, the variables structure, entropy, and interdependence of the legal texts associated with the VAT Law constitute the complexity index. A VAR model then finds evidence of Granger causality between legal complexity and VAT, although no cointegration relationship exists. Furthermore, an inverse relationship between the variables is confirmed, quantifying the short-term effect of legal complexity and comparing it for robustness with the estimation of an ARIMAX and generalized OLS model.

Keywords: VAT; legal complexity; VAR; ARIMA; Granger causality (search for similar items in EconPapers)
JEL-codes: H8 K3 (search for similar items in EconPapers)
Date: 2025-12-30
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