Abstract

MEJIA REYES, Pablo  and  REYES HERNANDEZ, Marlen Rocío. Public expenditure and business cycles in Mexico, 1980-2021. Ens. Rev. econ. [online]. 2023, vol.42, n.2, pp.151-181.  Epub Jan 29, 2024. ISSN 2448-8402.  https://doi.org/10.29105/ensayos42.2-2.

This paper analyzes the effects of the public expenditure components on the business cycles in Mexico over the period 1980-2021 by estimating bivariate regressions with structural change. Although our results depend on the detrending method and the particular component of public expenditure, in general, we find evidence of structural changes between the second half of the nineties and the first years of this century, which could be associated to the transition from the management of public expenditure as a stabilization instrument to a “prudential” one. Other important results suggest that total and current expenditure are procyclical over the full sample, while programmable expenditure and capital expenditure and physical investment are procyclical over the first two decades, but then become acyclical or countercyclical. In general, our findings imply that public expenditure and its main components do not contribute significantly to mitigate cyclical fluctuations and their effects are rather modest.Key words: Business cycles, Public expenditure, Structural change.

Keywords : Business cycles; Public expenditure; Structural change.

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