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...

Over the last two decades Mexico has modified her intergovernmental fiscal structure from a very centralized system to a distorted scenario where state governments have gained substantial expenditure functions and most of the taxation responsibilities remained in the federal government. It is...