ELASTICITY OF MUNICIPAL PUBLIC EXPENSES OF THE CAPITALS OF FEDERATIVE ENTITIES IN MEXICO ELASTICIDAD DE LOS EGRESOS PUBLICOS MUNICIPALES DE LAS CAPITALES DE LAS ENTIDADES FEDERATIVAS EN MEXICO

Rodolfo Valenzuela Reynaga and Adriana Veronica Hinojosa Cruz

Revista Internacional Administracion & Finanzas, 2017, vol. 10, issue 5, 81-94

Abstract: The Mexican fiscal system is characterized by a strong dependence on sub-national public finances in relation to the resources that the federal government sends to the states and municipalities. These resources are transmitted through transfers. The composition of municipal public expenditure might be associated with the type of source of income to which local governments have access to. The purpose of this investigation is to determine the behavior of municipal public expenses in the capitals of the Mexican states. We identify the effects of adjustments in the different types of public revenues of municipal expenditure. A data panel consisting of thirty-one cross-sectional (municipalities) with data from 2010 - 2014 was designed. Estimations are made through linear regression models considering fixed effects. The results suggest the total municipal outflows present a greater elasticity with the federal participations than with the rest of the municipal public revenues. Current expenditure is more sensitive to changes in tax revenues than in federal contributions. Public investment responds more to adjustments in federal and state contributions than to changes in local tax revenues and federal contributions

Keywords: Local Public Spending; Operating Expense; Public Investment (search for similar items in EconPapers)
JEL-codes: E62 H71 H72 H76 H77 (search for similar items in EconPapers)
Date: 2017
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