Indicadores de desempeño, presión y vulnerabilidad de las finanzas públicas estatales en México

The vulnerability and financial pressure of financial systems is a critical subject in light of the economic crisis we are currently facing. This paper defines financial pressure of local governments as the extreme situation characterized by financial imbalances, increasing current expenditure, lack of investment, excessive public debt and debt service. Using multivariate methods this paper develops six indexes that jointly measure the pressure on the states public finances in Mexico for the period 2001 - 2007. These indexes - which by construction are not correlated with each other - capture more than 80% of the variation of public finance variables and show the ranking of each state in relation to other states in Mexico. Among the results we find a trade-off between public investment and balance surpluses and between savings and current expenditure. The hence-obtained set of indexes can be used by local officials to assess the relative condition of his state public finances in relation to others and by the supervisors or regulatory bodies to asses the financial pressure experienced by state governments in Mexico. (Trimest Econ/GIGA)