The Long-run Sustainability of Fiscal Policy in Mexico: A Generational Accounting Approach

Carlos Sales Sarrapy and Luis Videgaray Caso
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Carlos Sales Sarrapy: Protego Investment Associates. México, D.F. Mexico
Luis Videgaray Caso: Instituto Tecnológico Autónomo de México (ITAM). México, D.F. Mexico

Economía Mexicana NUEVA ÉPOCA, 1999, vol. VIII, issue 2, 367-403

Abstract: This paper applies for the first time the generational accounting methodology to appraise the sustainability of current fiscal policies in Mexico. Generational accounting measures the consequences for future generations of current fiscal policies. Our main finding is that there is no evidence of a fiscal sustainability problem of the sort found for other countries in similar studies. The result is mainly due to favorable demographic dynamics over the coming decades and is robust to several alternative data assumptions. We conclude there is no evident need to raise overall taxes and that tax reform should focus on efficiency issues.

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:emc:ecomex:v:8:y:1999:i:2:p:367-403

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