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Mexico Needs a Fiscal Twist: Response to Covid-19 and Beyond

Mrs.Swarnali A HannanMs.Keiko HonjoMr.Mehdi Raissi

出版	International Monetary Fund, 2020-10-13
主題	Business & Economics / Public Finance
ISBN	151355901X9781513559018
URL	http://books.google.com.hk/books?id=CjsezgEACAAJ&hl=&source=gbs_api

註釋

Mexico’s fiscal response to the pandemic has been modest compared to its peers, reflecting the authorities’ desire to not issue new debt for spending. This approach, however, risks a more severe recession and a weaker economic recovery, with further costs in the future. Balancing the need for stronger near-term fiscal support for the people and the recovery against medium-term discipline, this paper lays out an alternative strategy. We show that credibly announcing a pro-growth and inclusive medium-term fiscal reform upfront—including increased tax capacity, higher public investment and strengthened social safety nets—would open space for larger short-term support and close medium-term fiscal gaps. Model simulations suggest that this package would boost output, limit lasting economic damage from the pandemic, and put debt trajectory on a declining path in the medium term as tax reforms pay off and risk premia decline.