Abstract

CERNICHIARO REYNA, Christopher; SOSA CASTRO, Magnolia Miriam  and  ORTIZ, Edgar. Incidence of public spending and subnational debt on state sector economic growth in Mexico (2010-2018). Anál. econ. [online]. 2022, vol.37, n.94, pp.85-104.  Epub Apr 08, 2022. ISSN 2448-6655.  https://doi.org/10.24275/uam/azc/dcsh/ae/2022v37n94/cernichiaro.

This paper aims to analyze the incidence of subnational public spending on the economic growth of Mexican states. To achieve that purpose, five panel models are estimated: three ordinary least squares (OLS), one with fixed effects without temporal dummies and other with temporal dummies. Data employed are annual observations for the 32 federal entities for the period 2010-2018. Results evidence that temporal and spatial effects explain economic growth. i) a 10% increase in contributions generates a 2.4% increase in GDP, ii) if subnational debt is augmented by 10%, economic growth increases by 0.64%, iii) federal participations are not related to economic activity, and iv) finally, a 10% increase in private consumption generates a 5.3% increase in economic growth.

Keywords : Federalized spending; economic cycles; Panel models with fix effects; H5; H70; H60; O43.