Abstract

IBARRA LOPEZ, Ignacio. Is it possible to reduce income inequality in Mexico with the current federal resource allocation formula?. Contad. Adm [online]. 2020, vol.65, n.3, 00008.  Epub Sep 13, 2021. ISSN 0186-1042.  https://doi.org/10.22201/fca.24488410e.2020.2314.

In this paper, we analyze if the way in which the Federation grants resources to states in Mexico has an impact on income inequality, as measured by the Gini index. A model of artificial intelligence is used, which includes the following stylized facts: a) the criteria of efficiency and equity established in the Fiscal Coordination Law (LCF); b) the dynamics of oil prices and federal revenues; c) a model decision on public services and state tax, which takes up the approach of Tiebout (1956). The main result of the work is to prove that the Gini coefficient does not decrease over time. On the contrary, it tends to increase. It is concluded that the fiscal institutional design that uses the current Fiscal Formula to allocate resources represents a limit to the reduction of inequality in Mexico.

Keywords : Computational economy; Fiscal federalism; Inequality; Public services; Local governments; H21; H23; H77.

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