Abstract

GARCIA MEZA, Mario Alberto. Effects of subnational public debt on public productive investment in Mexico. Anál. econ. [online]. 2019, vol.34, n.87, pp.199-222.  Epub Nov 13, 2020. ISSN 2448-6655.

Exploring the effects of state-level public debt, I find that it tends to be directed towards current expenditures, despite the entities’ legal obligation to direct it to public investment. A panel data analysis is carried out with random effects where the estimation of the effect of the debt on public investment is obtained and of these two variables in the per capita product in the states of the republic. It is found that there is a small but significant effect on the level of debt with public investment as well as an effect with the same characteristics between public investment and per capita output. This effect is consistent with the theory that a very high level of public debt exerts pressure on spending that is reflected in low levels of public investment.

Keywords : Public debt; public investment; random effects; regional growth.