Abstract

VALENZUELA-REYNAGA, Rodolfo  and  HINOJOSA-CRUZ, Adriana Verónica. Federal transfers, political counterweights and state fiscal revenues in Mexico. Economía UNAM [online]. 2017, vol.14, n.42, pp.47-71. ISSN 1665-952X.

The dependence of local public finances on Mexico in relation to the public resources transferred by the federal government presents a great challenge to the financial viability of subnational governments. This paper specifies a regression model for a data panel with information from the 31 Mexican states for the period 2005 - 2014. It was found that federal transfers have negative effects on the levels of state tax revenues. Positive effects were found on the level of income from tax sources when most local legislators have a partisan affiliation other than that of the governor. The positive relationship between the level of economic activity and the state tax revenue is verified. Finally, this demonstrates the need for a structural adjustment to the Mexican transfer system through the design of public policies on the sustainability of local public finances.

Keywords : State Tax Revenue; Transfers; Political Counterweights; E62; H71; H72; H76; H77.