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Tax reform in Mexico: a general equilibrium assessment


  • Horacio Sobarzo


This article reports the results of an Applied General Equilibrium Model (AGEM) built to simulate a recent fiscal reform initiative of the Mexican government. Treating public revenues as endogenous and tax rates as exogenous variables, the model explicitly incorporates both the tax structure and the oil-exporting sector as important sources of government revenues. The results confirm that the fiscal problem in Mexico lies in the low degree of tax compliance. By simulating the reform starting in the year 2008, the results suggest that consumption taxes are not necessarily the unique solution to the tax collection process in a developing country like Mexico.

Suggested Citation

  • Horacio Sobarzo, 2011. "Tax reform in Mexico: a general equilibrium assessment," Applied Economics Letters, Taylor & Francis Journals, vol. 18(7), pages 671-678.
  • Handle: RePEc:taf:apeclt:v:18:y:2011:i:7:p:671-678 DOI: 10.1080/13504851.2010.483999

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    References listed on IDEAS

    1. Batres-Marquez, S. Patricia & Jensen, Helen H. & Brester, Gary W., 2003. "Salvadoran Consumption of Ethnic Foods in the United States," Journal of Food Distribution Research, Food Distribution Research Society, vol. 34(02), July.
    2. J. Scott Shonkwiler & Steven T. Yen, 1999. "Two-Step Estimation of a Censored System of Equations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 972-982.
    3. Jeffrey T. LaFrance, 1990. "Incomplete Demand Systems And Semilogarithmic Demand Models," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 34(2), pages 118-131, August.
    4. Murphy, Kevin M & Topel, Robert H, 2002. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 88-97, January.
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