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Income elasticity of the main taxes in Mexico and fiscal loss during the COVID-19 pandemic

Author

Listed:
  • Juan Ramón Hernández

    (CIDE and Banco de México)

  • Daniel Ventosa-Santaulària

    (CIDE)

  • Brian Roque

    (CIDE)

Abstract

We estimate the income elasticity of Mexico's value-added, income and total taxes. Our findings reveal that the elasticity of these taxes is greater than one, indicating a responsive tax system to economic fluctuations. These results confirm the countercyclycal role of the tax system and underscore the growing importance of non-oil tax revenue in maintaining fiscal stability. A counterfactual analysis to assess the revenue losses attributable to the COVID-19 pandemic, offers insights on the resilience of Mexico's tax system to economic shocks.

Suggested Citation

  • Juan Ramón Hernández & Daniel Ventosa-Santaulària & Brian Roque, 2025. "Income elasticity of the main taxes in Mexico and fiscal loss during the COVID-19 pandemic," Economics Bulletin, AccessEcon, vol. 45(1), pages 586-594.
    • Handle: RePEc:ebl:ecbull:eb-24-00515
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    More about this item

    Keywords

    Income elasticity of taxes; Mexico; Emerging Economy; Covid-19 pandemic; ARDL; cointegration;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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