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Int. J. Financial Stud. 2016, 4(2), 6; doi:10.3390/ijfs4020006

Public Debt, Public Investment and Economic Growth in Mexico

Department of Social Sciences, Universidad Autónoma de Ciudad Juárez, 32310 Chihuahua, Mexico
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Academic Editor: Nicholas Apergis
Received: 12 December 2015 / Revised: 18 March 2016 / Accepted: 21 March 2016 / Published: 30 March 2016
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Abstract

The primary objective of this article is to answer the following two research questions: has the growing public debt of state governments promoted increased public investment? If the answer is yes, then does any increase in public investment lead to more growth in the Mexican states? Dynamic Models of panel data and the Generalized Method of Moments, with information for 32 states from 1993 to 2012, were used for this purpose. The econometric results confirmed that public debt is positively correlated with public investment and that this in turn generates economic growth. This does not mean that a good economic policy strategy has been followed, since the marginal positive impact of public investment, and therefore the public debt on the production per person, is reduced (1% increase in the interaction between public investment and public debt variable causes a 0.0005% increase in economic growth). This suggests deviations from the debt contracted for purposes other than production, which could lead to a situation of unsustainability of state public finances in the medium term. View Full-Text
Keywords: Mexico; economic growth; public finance; development Mexico; economic growth; public finance; development
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Sánchez-Juárez, I.; García-Almada, R. Public Debt, Public Investment and Economic Growth in Mexico. Int. J. Financial Stud. 2016, 4, 6.

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Int. J. Financial Stud. EISSN 2227-7072 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
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