The Dynamics of public investment, public debt and economic growth of states in Mexico
DOI:
https://doi.org/10.24275/Keywords:
Public investment, state public debt, Panel ARDLAbstract
This study aims to determine whether public investment and public debt have short - and long- term effects on economic growth at the state level in Mexico, specifically on state gross product per capita. To this end, and autoregressive distributed lag (ARDL) model for panel data is estimated using information from the 32 states of the country for the period from 1999-2022. The results confirm the existence of a positive long-term relationship between state debt, public investment, and per capita income, supporting the hypothesis that both factors contribute to economic growth in the long run. However, short-term effects are heterogeneus across states, with only a few showing positive or negative impacts. This suggests that, while short-term effects may be limited or inconsistent, public investment and state debt play a positive role in long-term income growth at the state level.
JEL Classification: O11, H74, C33.
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