Vol. 21 No. 44 (2026)

Artículos

Debt sustainability in Mexico: analysis of the budget constraint and fiscal reaction function

Published 2026-06-12

  • Carlos Aviud Vazquez
    • ,
  • Owen Eli Ceballos Mina
    • ,
  • Christopher Cernichiaro Reyna

Carlos Aviud Vazquez
Metropolitan Autonomous University image/svg+xml

Owen Eli Ceballos Mina
Metropolitan Autonomous University image/svg+xml

Christopher Cernichiaro Reyna
Metropolitan Autonomous University image/svg+xml

Abstract

This paper examines the sustainability of Mexico’s public debt by analyzing the government’s intertemporal budget constraint over the 2000–2024 period. Unit root tests, accounting for structural changes in trend and intercept, are employed to assess the stationarity of debt and its fiscal determinants. Additionally, an autoregressive distributed lag (ARDL) model is estimated to characterize the government’s fiscal reaction function. The results indicate that while revenues, expenditures, and the primary balance are stationary under structural shifts, public debt remains non-stationary, violating key intertemporal sustainability conditions. Furthermore, the primary balance responds negatively to increases in debt, signaling the absence of corrective fiscal mechanisms. The study concludes that Mexico’s fiscal position during the analyzed period fails to meet sustainability criteria, providing empirical evidence to inform debates on financial risks and the urgent need to strengthen fiscal responsibility frameworks.

Keywords

public debt, revenues, expenditures, primary balance, budget constraint

PDF (Spanish)

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