Abstract

MARROQUIN-ARREOLA, Juan  and  RIOS BOLIVAR, Humberto. Fiscal Decisions, Economic Growth and Income Inequality. Rev. mex. econ. finanz [online]. 2021, vol.16, n.4, e656.  Epub June 06, 2022. ISSN 2448-6795.  https://doi.org/10.21919/remef.v16i4.656.

The aim of this paper is to analyze how fiscal policy instruments influence growth and income inequality in Mexico. For which the theoretical background is presented and an endogenous growth model that incorporates fiscal variables is used. Likewise, an econometric model is estimated using the panel data technique. The empirical results show that; current spending does not impact economic growth; direct taxes have a negative impact on growth, while indirect taxes do not show significant results in the model; current spending contributes to reducing inequality; direct taxes contribute to a reduction in inequality, while indirect taxes contribute to increasing it. The originality and main contribution of this document lies in its approach by federal entity considering redistributive aspects. The limitation of this type of study is due to the scarcity of fiscal data in some states. It is recommended to consider other variables to determine the causal between efficiency and equity when determining fiscal variables.

Keywords : fiscal policy; economic growth; inequality.