“ World Crisis and MDG’s achievement in Mexico : A CGE Model”

“World Crisis and MDG’s achievement in Mexico : A

CGE Model”

By By Araceli Ortega DíazAraceli Ortega Díaz

Araceli Ortega [email protected]

Structure of the presentation


1. Introduction to Mexican MDGs

2. Macro economy, politics and poverty in Mexico.

3. CGE Model: adaptation and calibration.

4. MDG Module: adaptation and calibration.

5. Feasibility to reach MDGs under different scenarios of public policy.

6. Labor Market: Including Poverty and Inequality results.

7. Conclusions and recommendations.

2


Introduction to Mexican MDGs

3

Introduction


In September 6, the “Millennium Meeting” of United Nations took place in Monterrey, Mexico where there was signed and agenda to reduce poverty and improve the living standards of the world.

This agenda was agreed within the framework of MDGs, which should be reached by 2015, using 1990 as the reference year.

For every MDG there are several specific targets and for every target there are several verifiable indicators.

Every MDG and every target are interlinked, and reaching the goals will warranty that the world is a better place to live in economic, social and political terms.

4

¿What are the MDGs?


The MDG are 8, every one has a target, and each target has one or more indicators, in such a way that we have 18 targets and 49 indicators:

Currently discussion of postmillennial goals are in http://ec.europa.eu/europeaid/how/public-consultations/towards_post-2015-development-framework_en.htm

There is not a I-O with gender perspective

MILLENNIUM DEVELOPMENT GOALS1. Eradicate Poverty and Hunger2. Universal Primary Education3. Promote Gender Equality and Women Empowerment4. Reduce Child Mortality5. Reduce Maternal Mortality6. Combat HIV, Malaria and other 7. Environmental Sustainability8. Create a society for global development

5


Between 2004 and 2008, 18 countries in Latin America and the Caribbean made CGE models to reach MDGs. http://www.pnud.cl/MDG/4-1.asp http://www.econbiz.de/en/search/detailed-view/doc/all/Mexico/10003977752/?no_cache=1

http://www.palgrave.com/products/title.aspx?pid=400775 The research we finished have incidence of macroeconomic

policies on income distribution and poverty, child and maternal mortality, and potable water and sewage.

With collaboration of UN agencies, ECLAC, UNDP, IFPRI, and IADB, we all implement these models.

Taking into account the 2008 crisis, this CGE calculated the MAMs for five countries.

We work the first Mexican MAMs from 2005 to 2008, and this crisis MAMs from 2009 to 2012.

Introduction

6

Research Questions


1. ¿Are the MDGs 2, 4, 5 and 7ab reached in the base scenario? ¿How much is reached and what is the economic growth and public expenditures?

2. ¿How much will it cost to reach those MDGs using different financial options– in terms of annual average expenditure additional to the base scenario?

3. ¿What is the impact of each type of financial option in economic growth (trade-offs) and in MDGs and why?

4. ¿What seems to be the most feasible financial option and recommended, and why? – in terms of resources mobilization with respect to GDP and the accumulated public debt stock with respect of GDP in the relevant cases?

7

Research Questions


7. ¿How much additional public expenditure is required to reach MDGs once the effects of the crisis are considered?

8. ¿Will the governments have the capacity to finance a sustainable strategy for MDGs ?

9. ¿Until what point the public expenditure required to finance the success of MDGs will have a counter cyclical effect over the recovery of economic growth?

10. ¿How will the above be linked with the current public policies that the government is implementing to dismiss the effects of the crisis?

11. ¿What will be the impact of an increase in the public expenditure in infrastructure in terms of MDGs achievement?

8

Mexican MDGs using 2003 as base year



Macroeconomy, Finance and Poverty in Mexico.

http://www.pnud.cl/mdgproject/NarrativaMexicoFinalSzekelyOrtega.pdf

10

Countercyclical Policy

According to the General Criteria of Economic Policy in the “Secretaría de Hacienda y Crédito Público” the principal instruments of this countercyclical policy are : “Using non recurrent income like the savings that are in the

stabilization funds, Petrol / oil hedges , Operational rebate of the Central Bank; and Exercise a more efficient public expenditure, in which the budget for

social development is protected and there is an impulse to investment to contribute and reactivate the Mexican economy and generate savings in key areas of the Federal Public Administration” (SHCP 2010).

This measure takes into account the 15.2% annual real expenditure , an increase in 74.8% of the real investment in infrastructure in the period January-July 2008 with respect to 2009, and an increase in the public investment foster by the public sector of 5.0% of GDP.


Aggregate Supply and Aggregate Demand


2003 2004 2005 2006 2007 2008PIB 1.4 4 3.2 5.1 3.3 1.3Consumo Público 0.8 -2.8 2.4 1.7 2.1 0.6Formación de capital público 8.5 15.4 8.7 -1.6 12.9 15.8

2009 2010 2011 2012 2013 2014 2015

PIB ** 1.8 3.655 4.682 4.762 4.37 4.373 4.373

Consumo Público 2.1 2.1 2.1 2.1 2.1 2.1 2.1

Formación de capital público 12.9 12.9 12.9 12.9 12.9 12.9 12.9

2009 2010 2011 2012 2013 2014 2015

PIB ** -6.5 3 0.9586 1.438 1.92 2.3964 2.8757

Consumo Público *** 0.6 3.2 3.7 3.9 4 4 4Formación de capital público *** 15.8 4 4.7 5.4 5.7 5.6 5.4

* Corresponde al cálculo trimestral. Fuente: INEGI/SHCP ** Fuentes de proyecciones del FMI y UN-DESA***Fuente: Cálculos propios con datos de Banco de México

Pronósticos para modelar Postcrisis

(Variación real anual) Datos Observados*

Pronósticos para modelar Precrisis *

12

-0.1

-0.05

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Tasa de crecimiento de préstamos del exterior (fborgrw) y de la infraestructura nueva

Precrisis (fborgrw) Postcrisis (fborgrw) Infraestructura

Fuente: Banxico, cálculos propios.

aumento del 74.8% real de la inversión física

Mexico was paying less and less interests and the debt was decreasing at an average rate of 1,5% . Notwithstanding, due to the crisis, Mexico asked for an IMF borrowing and the debt increased to 22%, and afterwards it is expected not to increase more than 10% annually (BANXICO, January 2010) .

Growth rate of foreign borrowing (fborgrw) and new infrastructure



-8.%

-6.%

-4.%

-2.%

0.%

2.%

4.%

6.%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Tasa de crecimiento del PIB real a costo de los factores en los escenarios base “precrisis” y “de

crisis”, 2003-2015 (Porcentaje)

Escenario pre-crisis Escenario post crisis

Fuente: Estimaciones de los autores

GDP Growth rate at Factor Costs in the “precrisis” and “crisis” scenario, 2003-2015

(percentage)

14


21.4 21.2

37.433.3

24.120.0

17.4 18.213.8

18.4 18.8

29.7 30.0

46.941.7

31.826.9 24.7 24.7

20.725.3 26.7

53.1 52.4

69.063.7

53.650.0

47.2 47.042.7

47.751.3

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

1992 1994 1996 1998 2000 2002 2004 2005 2006 2008 2010

Porc

enta

je d

e pe

rson

as e

n po

brez

aGráfica 2. Evolución de la pobreza por ingresos nacional, 1992 a 2010

(porcentaje de personas)

Alimentaria Capacidades Patrimonio

Fuente: estimaciones del CONEVAL con base en las ENIGH de 1992 a 2010 y corrección por factores de expansión

Evolution of income poverty for official Mexican Lines

15


Model: adaptation and calibration.

16

¿What Model Shall we use?


We need a model that takes into account: Macroeconomic processes, Public Policy decisions of the Government, Consumption-saving decisions of the households, Effects of the ROW, Heath of individuals. The School level of the workers and household

members.

17

CGE


We use a Computable General Equilibrium Model (CGEM) designed to reach MDGs and the strategies of economic growth, poverty reduction and inequality.

The key requirement is the creation of a database that summarizes the economy and track the MDG’s for Mexico.

18

MODEL


Static CGE Module

MDG Module

Dynamic GCE Module

Micro simulation Module

19


MODELMODEL

Static CGE Module

62 eq.

•Block of prices and Production •Consumption (Household and Government)•Investment (Private and Public)•Trade (Domestic and Foreign)•Income and Expenditure of Government•Market Restrictions•Macroeconomic Balances (Closures)

Government Balance.

Balance of payments.

Balance of savings and investment.

Factor Markets.

•Simulation decisions

20


MODELMODEL

Dynamic GCE Module, 15 eq.

Associate and Update parameters•Supply Factors•Productivity Factors•Population •Economic Indicators

21


MODELMODEL

MDG Module,14eq.•Processes that determine the achievement of MDGs

•Provisions of services (health, education, water & infrastructure)

•Size and composition of the labor force

•Effects of feedback to the rest of the economy

22


MODELMODEL

Micro simulation Module•Poverty and Inequality Analysis.

Static CGE Module

MDG Module

Dynamic CGE Module

23

Adaptation and Calibration of the Model


SAM 2003 with 21 activities and 21 goods, 8 factor types and 3 instituions types.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21a-agr a-nrexp a-ind a-ser a-edup1 a-edup2 a-edus a-edut a-hlt1g a-hlt2g a-hlt3g a-hlt1ng a-hlt2ng a-hlt3ng a-edup1ng a-edup2ng a-edusng a-edutng a-wtsn a-oinf a-ogovc-agr c-nrexp c-ind c-ser c-edup1 c-edup2 c-edus c-edut c-hlt1g c-hlt2g c-hlt3g c-hlt1ng c-hlt2ng c-hlt3ng c-edup1ng c-edup2ng c-edusng c-edutng c-wtsn c-oinf c-ogovf-labn f-labs f-labt f-land f-natres f-capprv f-capwtsn f-capogovhhd gov rowtax-dir tax-imp tax-exp tax-oindint-dom int-rowsav-hhd sav-gov sav-rowcap-hhd cap-gov cap-rowinv-edup1 inv-edup2 inv-edus inv-edut inv-hlt1g inv-hlt2g inv-hlt3g inv-wtsn inv-oinf inv-ogov inv-prv dstk

Source: National Accounts, Economic Census, ENIGHs. 24


SAM 2003: 21 Activities and 21 Goods Agriculture , Forestry and Fishing Miner Manufacture Health Services: 3 public & 3 private Education Services: 4 pub & 4 priv. Water and Sewage services Other private services Other government services Infrastructure

1 +

1 +

1+

6+

8 +

1 +

1 +

1+

1

=

21

Use I-O Matrix for 2003 (RAS from 1980), in 2007 INEGI released 2003 I-O.25


SAM – Labor types

LAB-N: workers with less than secondary school completed.

LAB-S: workers with secondary school completed and less than high school completed.

LAB-T: workers with high school completed or more.

There are three labor types in Mexican SAM-MAMs

ENIGH & National Accounts.26


Institutions in SAM 2003

HHD- Household, enterprises and NGOs.

GOB- Government

ROW- Rest of the World

27

¿ Wage?


Sin Escolaridad 1Primaria 1.78Secundaria 3.17Prepa 4.9Universidad 8.19Fuente: Székely (2003).

Retornos a la Educación (wage premium)con base en la ENIGH-2002

Workers

28


MDG Module: adaptation and calibration

29

ELASTICITIES: Adaptation and calibration


1. Armington (CES): was estimated using error correction method with a quarterly time series 1993-2005:

))(/)(log(

))(/)(log(

tXtP

tXtXij

dj

dj

ij

j

Xd domestic demand of good j , Xi foreign demand of good j.

)())(/)(log())(/)(log( 10 tutPtPtXtX jij

djjj

dj

ij

)())(/)(log(

))1(/)1(log())(/)(log(2

10

tutPtP

tXtXtXtX

jij

djj

dj

ijjj

dj

ij

)())](/)(log())1(/)1(log([

))(/)(log())(/)(log(2

10

tutPtPtXtX

tXtPtXtXij

dj

dj

ijj

ij

djjj

dj

ij

OLS

PA

ECM

30


2. LES : Income elasticity of demand for good and services was estimated using a logit model and data from ENIGH-2002, it was an aggregate estimation.

chch

c

chchch PQEH

PQQH *

QH is the demand of good c by household h, EH is the expenditure of h, PQ is the price of c, γ>0 & ß<1 are the LES parameters, γ is the subsistence parameter and ß the additional marginal unit after consuming γ.


31


3. CET: We estimated as in CES.

4. Prodelas: Elasticity of substitution among factor for the low part of the technology and was estimated using annual data from 1970-2003 controlling for crisis periods.

5. Logistics: We estimate different models using the determinants of education, health and potable water and sewage. We calibrate the model using this estimations and some initial parameters.

It is worth to mention that calculating the elasticities is one of the most difficult parts to complete the data base for a CGE model due to lack of information.


32

MDG MODULE : Adaptation and Calibration


Scenarios : according to different studies we define the different scenarios for the simulations.

trg-yr-edu trg-yr-mdgeduqualrat c-edup1 1.900eduqualrat c-edup2 1.950eduqualrat c-edus 1.200eduqualrat c-edut 1.100wfrat f-labs 1.000wfrat f-labt 1.000mdgrat mdg4 0.250mdgrat mdg7a 1.059mdgrat mdg7b 1.023qfcaprat f-capoinf 2.100 2.000qhpcrat dummy 1.500 2.000qqpcrat c-wtsn 1.300qqpcrat c-hlt 1.61033


Scenarios for the public policies considerate.

FINANCE WITH:

1. Domestic debt

2. Foreign debt

3. Fiscal

4. Foreign endowments

MDG MODULE : Adaptation and Calibration

34

Macroeconomic Closures


Rules for Clearing Saving-Investment Balance

No. Household investment Household saving

1 Clearing variable: investment quantities; endogenous GDP and absorption shares

Rule-determined savings rate for households

2 Exogenous absorption share Clearing variable: uniform savings rate point change for selected households

3 Exogenous absorption share Clearing variable: uniform savings rate scaling for selected households

4 Exogenous GDP share Clearing variable: uniform savings rate point change for selected households

5 Exogenous GDP share Clearing variables: uniform savings rate scaling for selected households

35



Rules for Clearing the Government Budget

No Variable clearing the budget

1234567

All domestic tax rates (direct and indirect): uniform scalingDirect tax rates: uniform point of change for selected householdsDirect tax rates: uniform scaling for selected householdsTransfers to government from the rest of the world (grand aid)Foreign borrowingDomestic government borrowing (interest paid on debt)Government borrowing via monetary sector

8 Separate treatment of current and capital budgets:*a.Current budget: direct tax rates: uniform scaling for selected households (same as 3)b.Capital budget: domestic government borrowing (same as 6); exogenous government savings*

9 Government spending on one or more commodities (specified by government spending rule)

* To separate the two, government saving (current receipts – current spending) is exogenous; for all the other rules, it is endogenous. 36



Rules for Government Spending

No Rule (disaggregated by commodity)

1

2

3

4

5

Fixed real growth rates for government consumption*

Fixed GDP share

Fixed absorption share

Fixed educational quality for cycle of commodity**

All items under 1-4 are flexible***

*For infrastructure, fixed growth rate for capital, not consumption;** Only for education services (one per level or cycle); quality = [service level]/[enrollment].*** If other rule controls spending. Required for at least one commodity if government closure 9; required for MDG-related services when MDGs are targeted.

Infra, o-gov

37





Gobierno GOV-1 Resto del Mundo ROW-1 Ahorro-Inversión SI-1Tasa de Impuestos Directos Fijo Tipo de Cambio Flexible Proporción de la Absorbsión

para Inversión PrivadaFijo

Ahorro de Gobierno Flexible Donaciones del Extranjero Fijo Proporción de la Absorbsiónpara Inversión Total

Flexible

Deuda Interna de Gobierno (bonos) Flexible Deuda Externa Fijo Tasa de Ahorro Privada FlexibleDeuda Externa FijoDonaciones del Exterior Fijo

Gobierno GOV-2 Resto del Mundo ROW-1 Ahorro-Inversión SI-1Tasa de Impuestos Directos Flexible Tipo de Cambio Flexible Proporción de la Absorbsión



Flexible

Deuda Interna de Gobierno (bonos) Fijo Deuda Externa Fijo Tasa de Ahorro Privada FlexibleDeuda Externa FijoDonaciones del Exterior Fijo

CIERRES MACRO PARA EL ESCENARIO BASE

CIERRES MACRO PARA EL ESCENARIO BASE00

39






Flexible

Deuda Interna de Gobierno (bonos) Fijo Deuda Externa Flexible Tasa de Ahorro Privada FlexibleDeuda Externa FijoDonaciones del Exterior Flexible



Ahorro de Gobierno Flexible Donaciones del Extranjero Flexible Proporción de la Absorbsiónpara Inversión Total

Flexible

Deuda Interna de Gobierno (bonos) Fijo Deuda Externa Fijo Tasa de Ahorro Privada FlexibleDeuda Externa FlexibleDonaciones del Exterior Fijo

CIERRES MACRO PARA EL ESCENARIO DE DONACIONES PROVENIENTES DEL EXTRANJERO (FG)

CIERRES MACRO PARA EL ESCENARIO DE DEUDA EXTERNA (FB)

40






Flexible

Deuda Interna de Gobierno (bonos) Flexible Deuda Externa Fijo Tasa de Ahorro Privada FlexibleDeuda Externa FijoDonaciones del Exterior Fijo

Gobierno GOV-2 Resto del Mundo ROW-1 Ahorro-Inversión SI-1Tasa de Impuestos Directos(Uniforme)

Flexible Tipo de Cambio Flexible Proporción de la Absorbsiónpara Inversión Privada

Fijo


Flexible

Deuda Interna de Gobierno (bonos) Fijo Deuda Externa Fijo Tasa de Ahorro Privada FlexibleDeuda Externa FijoDonaciones del Exterior Fijo

CIERRES MACRO PARA EL ESCENARIO DE DEUDA INTERNA (DB)

CIERRES MACRO PARA EL ESCENARIO DE RECAUDACIÓN FISCAL (TAX)

41

MDG Module: Cross Effects


MDG 2 TERMINAL EFFICIENTY IN PRIMARY

Labor Supply

Labor remuneration

MDG 7: Access to water and sewage services

MDG4: Child Mortality

MDG5: Maternal Mortality

MDG1

42

MDG2: Universal PrimaryStudents Behavior


Some primary students:

•Enter at the official age : 6 year old

•Enter later

•Pass to next level

•Others Fail

•Others drop out

•Others repeat and

• Others enter the labor market.

43

MDG2: Universal PrimaryStudents Behavior


1998 1999 2000 2001 2002 2003g1entry c-edup1 1.000 0.990 0.991 0.992 0.993 0.994grd c-edup1 0.990 0.987 0.983 0.980 0.976 0.973 0.89254407grd c-edup2 0.761 0.751 0.749 0.777 0.784036 0.784916grd c-edus 0.551 0.556 0.570 0.572 0.592585 0.556135grd c-edut 0.788 0.780 0.785 0.789 0.783524 0.775234grdcont c-edup1 0.954138grdcont c-edup2 0.968464grdcont c-edus 0.767142grdexit c-edup1 0.045862grdexit c-edup2 0.031536grdexit c-edus 0.232858grdexit c-edut 1rep c-edup1 0.0145rep c-edup2 0.147084rep c-edus 0.285865rep c-edut 0.141766dropout c-edup1 0.013dropout c-edup2 0.068dropout c-edus 0.158dropout c-edut 0.083grdcyc c-edup1 0.199985grdcyc c-edup2 0.169449grdcyc c-edus 0.067891grdcyc c-edut 0.08393contcyc c-edup1 0.772515contcyc c-edup2 0.615467contcyc c-edus 0.488244contcyc c-edut 0.691303

PRIMARY

SECONDARY

HIGH SCHOOL

University

44

LABOUR FORCE BEHAVIOUR


Endowment of labor type lab in year t (this year)

= [no-retired type lab of previous year ]

+ [entrant type lab graduated of different school levels the previous year]

+ [entrants type lab drop outs of different school levels the previous year]

+[entrants type lab out of schooling system (esp. 12-year old]

45

¿Do we reach MDG 2, 4, 5 and 7ab in the base scenario? ¿What is reach and at what public cost?


2500000.0

3000000.0

3500000.0

4000000.0

4500000.0

5000000.0

5500000.0

6000000.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mill

ones

de P

esos

(MD

P)

Gasto Total de Gobierno en el Escenario Base

Base precrisis Base AnticíclicaFuente: Estimaciones del autorFuente: Estimaciones de los autores

46

¿Do we reach MDG 2, 4, 5 and 7ab in the base scenario? ¿What is reach and at what public cost?


In the base scenario without crisis we use the macroeconomic rates observed until 2008 and the forecast from 2009 to 2015 estimated before the crisis.

With these assumptions we determine what would be the advance of MDGs in 2015 and we found that if Mexico would have continued with this economic growth and paying the foreign debt (every time smaller), all MDGs except MDG2, would have been reached.

But only MDG1 is reached in the post crisis counter cyclic scenario.

In the post-crisis counter cyclic scenario, the other MDGs are not reached, we need more resources than the ones given by the economic package to increase government expenditure.

47

0.14

0.16

0.18

0.2

0.22

0.24

0.26

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

ODM4. Mortalidad Infantil

Meta 2015 Base precrisis Base postcrisis anticiclico

Child mortality goal for 2015 is 147 deaths for every 10,000 births. In the base scenario of precrisis the goal was reached, whereas in the postcrisis base scenario even with countercyclical policies is not reached. Mexico would need to decrease 5.2 deaths to reach the goal. This result is helped due to the economic package in 2009 that increased health expenditure in 6000 million pesos (mdp) extras in Fideicomiso del Sistema de Protección Social en Salud (Catastrophic expenses), otherwise the situation would be worse.


0.20

0.30

0.40

0.50

0.60

0.70

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

ODM5. Mortalidad Materna

Base precrisis Base Postcrisis anticíclico Meta 2015

The maternal mortality goal, is the most difficult goal to be reached for Mexico because it implies to decrease the indicator to 0.223 for 2015.

This MDG5 could have been reached in 2014 under macroeconomic stability and pre crisis parameters, reaching 0.200 in 2015.

In the base scenario post crisis countercyclical is not reached (0.174), it stays in 0.266.


¿How much will it cost to reach MDGs with different financial options– in terms of additional annual expenditure with respect the base scenario?


32.0

33.0

34.0

35.0

36.0

37.0

38.0

39.0

40.0

41.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Gasto Total de Gobierno por año (% PIB nominal)

Base de Gasto Total PrecrisisBase con Gasto Total Postcrisis con Política AnticíclicaBase con Gasto Total Postcrisis Procíclico


50

Endeudamiento externo

Impuestos Endeudamiento interno

Endeudamiento externo

Impuestos Endeudamiento interno

Infraestructura

Educación primaria 0.70 0.74 0.79 0.82 0.90 1.03 -0.21Consumo final 0.70 0.73 0.79 0.82 0.90 1.02 -0.21Inversión 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Salud -0.03 0.10 0.28 0.99 1.56 2.04 -0.56Consumo final -0.03 0.10 0.28 0.98 1.55 2.02 -0.56Inversión 0.00 0.00 0.00 0.01 0.01 0.01 0.00

Agua y saneamiento -0.17 -0.15 -0.11 0.08 0.13 0.22 -0.09Consumo final -0.18 -0.16 -0.14 0.07 0.11 0.16 -0.01Inversión 0.01 0.01 0.03 0.01 0.02 0.05 -0.08

Total 0.51 0.68 0.95 1.89 2.60 3.28 -0.86Consumo final 0.50 0.67 0.92 1.87 2.56 3.21 -0.78Inversión 0.01 0.02 0.03 0.02 0.03 0.07 -0.08

1/ Corresponde al escenario base de crisis combinado con un aumento de un 1% del PIB en el gasto de infraestructura pública en el año 2010.

Fuente: MAMS aplicado con datos de México.

Precisis Postcrisis con Política Anticíclica

¿How much will it cost to reach MDGs with different financial options– in terms of additional annual expenditure with respect the base scenario?



11.0

13.0

15.0

17.0

19.0

21.0

23.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Porc

enta

je de

l PIB

Evolución del Consumo de Gobierno bajo distintos escenarios(Post crisis con política anticíclica) odm2-impuestos

odm2-deuda externa

odm2-deuda interna

odm45-impuestos

odm45-deuda externaodm45-deuda interna

odm7-impuestos

odm7-deuda externa

odm7-deuda interna

odm-impuestos

odm-deuda externa

odm-deuda interna

Infra

Fuente: Estimaciones de los autores52

Tax Scenario


7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Porc

enta

je d

el PI

B

Evolución de los Impuestos Indirectos Netos en escenarios conjuntos(Post crisis anticiclico)

odm-impuestos

odm-deuda externa

odm-deuda interna

infra


53

Domestic Debt Scenario.


11.0

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Por

cen

taje

del

PIB

Evolución de la Deuda Doméstica de Gobierno

Base precrisis Base poscrisis anticíclica


54

Foreign Debt Scenario


0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Po

rcen

taje

del

PIB

Deuda externa de gobierno como porcentaje del PIB escenarios conjuntos postcrisis

Base precrisis Base poscrisis anticíclica

55

MICROSIMULATION


Micro simulationsIncome is model as :

yphi = income per capita of member i of household h,

nh = size of the household h, yphi = labor income of member i of

household h, yqh = sum of non labor income


h

n

ihi

hhi yqyp

nypc

h

1

1

57

Effects on the labour market

We model the effects using Paes de Barros method :

λ = λ (P,U,S,W1,W2,M)

P - participation rate of group j U - unemployment of group j S - economic structure of sector k W1 – employment structure W2 – average wage M - skill level of the worker


Classification by sector


PARTICIPANT IN THE SAMPLE

NON PARTICIPANT IN THE SAMPLE

Employed

Unemployed

Skilled

Unskilled

Skilled

Unskilled

59


Table 4. Economic Sector Change rate by skilled level 2003-2004

Efecto Sgrupoj agricultura minería manufactura servicios

1 -0.015607 -0.001 0.01304398 0.038812

2 -0.003079 -0.001 0.02521841 0.027573 -0.000723 -0.001 0.02750878 0.032336

Sector

Nivel de Calificación

2003-2005 Efecto S

grupoj agricultura minería manufactura servicios1 0.04204 0.002 0.01305 0.077892 0.00646 0.002 -0.02283 0.042493 0.00755 0.002 -0.02159 0.05943Nivel de Calificación

Sector

2003-2010 Efecto S

grupoj agricultura minería manufactura servicios1 0.1763 0.007 0.1398 0.31922 -0.0036 0.007 -0.0464 0.10233 0.0204 0.007 -0.0214 0.2002

Sector

Nivel de Calificación

2003-2015 Efecto S

grupoj agricultura minería manufactura servicios1 0.273 0.012 0.208 0.5552 -0.024 0.012 -0.111 0.1723 0.022 0.012 -0.062 0.381Nivel de Calificación

Sector

60

Micro simulation

Every participant in the sample is assigned a random number .

Workers are ordered by economic sector and skilled level,

The worker is assigned a new wage according to λ* and can be employed or unemployed.

If it becomes unemployed his wage is zero.


Effects of changing the rate of employment and skilled labor (N=100)

Sumulation1 Simulation 2

Obs ↓ decrease rate of

unemployment to 6%

Sim ↑ increase in the rate of

unemployment to12%

Sim

Employed 90No Change

90 ↓↓↓↓

↓

The last 2 employed become unemployed

88 Employed

↑↑↑↑↑↑

first 4 unemployed become employed

4 2 Unemployed

Unemployed 10 6

No change

10

Source: Cicowitz.Araceli Ortega [email protected]

Other effect of micro simulations

To simulate a change in wage (effect W1 ), labor income is multiply by a factor that comes from the CGEM for each category, keeping fix the whole income of the economy.

To simulate average wage effect ( W2 ) all labor income is multiply by average wage.

With the new income, the poverty line is recalculated.

The simulations are also obtained for the workers that change sector (effect S).


Microsimulation

We repeat this process 100 times to calculate the confident intervals.

Every time that a new income distribution is generated, the poverty indicators are calculated.

This process is performed from 2003 to 2015.

The unique disadvantage is that population size do not change.

The effects can be presented by single step or accumulates, in this work are presented accumulative.


¿What is the impact of an increase in public expenditure in infrastructure in terms of: MDG1?


The micro simulations with ENIGH-2008 indicate that the MDG1 under an scenario with new infrastructure reaches poverty levels lower than in 2015 with (W2) compensated wage;

Inequality is also the lowest for this scenario using the Theil coefficient.

In fact the effect W2 and the scenario of new infrastructure are the ones where poverty is reachable.

65

Poverty and inequality Evolution for different financial scenarios.


Simulación

2008 2010 2015 2008 2010 2015 2008 2010 2015 2008 2010 2015

fgt_1.25usd 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05

fgt_2usd 10.09 10.09 10.09 10.09 10.09 10.09 10.09 10.09 10.09 10.09 10.09 10.09

fgt_moderate 25.17 25.17 25.17 25.17 25.17 25.17 25.17 25.17 25.17 25.17 25.17 25.17

fgt_extreme 18.31 18.31 18.31 18.31 18.31 18.31 18.31 18.31 18.31 18.31 18.31 18.31

gini_ypc 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51

gini_ylab 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49

theil_ypc 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55

fgt_1.25usd_u 5.85 5.84 5.65 5.85 5.84 5.79 5.85 5.80 5.66 5.85 5.79 5.69

fgt_2usd_u 15.89 15.76 15.37 15.89 15.87 15.54 15.89 15.82 15.44 15.89 15.83 15.48

fgt_moderate_u 31.29 31.17 30.61 31.29 31.33 30.86 31.29 31.27 30.70 31.29 31.29 30.75

fgt_extreme_u 24.40 24.31 23.81 24.40 24.49 24.05 24.40 24.41 23.87 24.40 24.43 23.96

gini_ypc_u 0.53 0.52 0.52 0.53 0.52 0.52 0.53 0.52 0.52 0.53 0.52 0.52

gini_ylab_u 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49

theil_ypc_u 0.57 0.57 0.56 0.57 0.57 0.57 0.57 0.57 0.56 0.57 0.57 0.56

fgt_1.25usd_s 5.85 5.70 5.28 5.85 5.69 5.46 5.85 5.63 5.35 5.85 5.66 5.40

fgt_2usd_s 15.89 15.52 14.57 15.89 15.51 14.77 15.89 15.44 14.67 15.89 15.52 14.67

fgt_moderate_s 31.29 30.87 29.62 31.29 30.94 29.94 31.29 30.89 29.70 31.29 30.93 29.72

fgt_extreme_s 24.40 24.00 22.86 24.40 24.07 23.15 24.40 23.98 22.93 24.40 24.04 23.00

gini_ypc_s 0.53 0.52 0.52 0.53 0.52 0.52 0.53 0.52 0.52 0.53 0.52 0.52

gini_ylab_s 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49

theil_ypc_s 0.57 0.57 0.55 0.57 0.56 0.55 0.57 0.56 0.55 0.57 0.56 0.55

fgt_1.25usd_w1 5.85 5.78 5.50 5.85 5.79 5.76 5.85 5.77 5.66 5.85 5.76 5.68

fgt_2usd_w1 15.89 15.53 14.94 15.89 15.58 15.24 15.89 15.53 15.10 15.89 15.60 15.15

fgt_moderate_w1 31.29 31.08 30.42 31.29 31.14 30.62 31.29 31.16 30.45 31.29 31.13 30.43

fgt_extreme_w1 24.40 24.14 23.61 24.40 24.19 23.97 24.40 24.15 23.62 24.40 24.20 23.72

gini_ypc_w1 0.53 0.52 0.52 0.53 0.52 0.52 0.53 0.52 0.52 0.53 0.52 0.52

gini_ylab_w1 0.49 0.50 0.50 0.49 0.50 0.50 0.49 0.50 0.50 0.49 0.50 0.50

theil_ypc_w1 0.57 0.57 0.56 0.57 0.57 0.56 0.57 0.57 0.56 0.57 0.57 0.56

fgt_1.25usd_w2 5.85 4.31 2.39 5.85 4.42 2.85 5.85 4.20 2.59 5.85 4.28 2.54

fgt_2usd_w2 15.89 14.26 8.88 15.89 14.34 10.25 15.89 14.06 9.22 15.89 14.23 9.38

fgt_moderate_w2 31.29 29.23 21.06 31.29 29.30 23.21 31.29 29.03 21.47 31.29 29.21 21.79

fgt_extreme_w2 24.40 22.46 15.42 24.40 22.50 17.25 24.40 22.25 15.80 24.40 22.46 16.13

gini_ypc_w2 0.53 0.52 0.51 0.53 0.52 0.52 0.53 0.52 0.51 0.53 0.52 0.52

gini_ylab_w2 0.49 0.50 0.50 0.49 0.50 0.50 0.49 0.50 0.50 0.49 0.50 0.50

theil_ypc_w2 0.57 0.56 0.54 0.57 0.56 0.54 0.57 0.56 0.54 0.57 0.56 0.54

fgt_1.25usd_m 5.85 4.37 2.50 5.85 4.56 3.07 5.85 4.28 2.70 5.85 4.38 2.59

fgt_2usd_m 15.89 14.26 9.33 15.89 14.42 10.63 15.89 14.14 9.79 15.89 14.35 9.67

fgt_moderate_m 31.29 29.24 21.34 31.29 29.35 23.49 31.29 29.09 21.96 31.29 29.23 22.02

fgt_extreme_m 24.40 22.40 15.73 24.40 22.56 17.55 24.40 22.31 16.25 24.40 22.51 16.32

gini_ypc_m 0.53 0.52 0.51 0.53 0.52 0.51 0.53 0.52 0.51 0.53 0.52 0.51

gini_ylab_m 0.49 0.50 0.50 0.49 0.50 0.50 0.49 0.50 0.50 0.49 0.49 0.50

theil_ypc_m 0.57 0.56 0.53 0.57 0.56 0.54 0.57 0.56 0.53 0.57 0.56 0.53

Fuente: Cálculos del autor

Simulación BaseSimulación con Endeudamiento

DomésticoSimulación con Endeudamiento

ExternoSimulación con Recaudación

Fiscal

66


Simulación

2008 2010 2015 2008 2010 2015 2008 2010 2015 2008 2010 2015 2008 2010 2015

fgt_1.25usd 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05

fgt_2usd 10.09 10.09 10.09 10.09 10.09 10.09 10.09 10.09 10.09 10.09 10.09 10.09 10.09 10.09 10.09

fgt_moderate 25.17 25.17 25.17 25.17 25.17 25.17 25.17 25.17 25.17 25.17 25.17 25.17 25.17 25.17 25.17

fgt_extreme 18.31 18.31 18.31 18.31 18.31 18.31 18.31 18.31 18.31 18.31 18.31 18.31 18.31 18.31 18.31

gini_ypc 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51

gini_ylab 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49

theil_ypc 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55

fgt_1.25usd_u 5.85 6.14 6.13 5.85 6.28 6.54 5.85 6.21 6.14 5.85 6.27 6.19 5.85 5.97 5.62

fgt_2usd_u 15.89 16.16 16.07 15.89 16.30 16.55 15.89 16.25 16.09 15.89 16.30 16.21 15.89 15.91 15.37

fgt_moderate_u 31.29 31.62 31.41 31.29 31.76 32.16 31.29 31.72 31.49 31.29 31.76 31.65 31.29 31.42 30.64

fgt_extreme_u 24.40 24.72 24.60 24.40 24.85 25.31 24.40 24.81 24.63 24.40 24.85 24.79 24.40 24.55 23.82

gini_ypc_u 0.53 0.53 0.52 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.52

gini_ylab_u 0.49 0.49 0.50 0.49 0.49 0.50 0.49 0.49 0.50 0.49 0.49 0.50 0.49 0.49 0.49

theil_ypc_u 0.57 0.57 0.57 0.57 0.57 0.58 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.56

fgt_1.25usd_s 5.85 6.05 5.71 5.85 6.34 6.29 5.85 6.17 5.88 5.85 6.20 5.81 5.85 5.83 5.31

fgt_2usd_s 15.89 16.02 15.18 15.89 16.12 15.62 15.89 16.06 15.27 15.89 16.05 15.33 15.89 15.67 14.61

fgt_moderate_s 31.29 31.40 30.45 31.29 31.52 31.07 31.29 31.49 30.58 31.29 31.42 30.63 31.29 31.08 29.71

fgt_extreme_s 24.40 24.52 23.54 24.40 24.59 24.13 24.40 24.54 23.64 24.40 24.51 23.68 24.40 24.25 22.92

gini_ypc_s 0.53 0.53 0.52 0.53 0.52 0.52 0.53 0.52 0.52 0.53 0.52 0.52 0.53 0.52 0.52

gini_ylab_s 0.49 0.50 0.49 0.49 0.50 0.49 0.49 0.50 0.49 0.49 0.50 0.49 0.49 0.49 0.49

theil_ypc_s 0.57 0.57 0.56 0.57 0.57 0.56 0.57 0.57 0.56 0.57 0.57 0.56 0.57 0.57 0.55

fgt_1.25usd_w1 5.85 5.82 5.67 5.85 6.18 6.04 5.85 6.11 5.98 5.85 6.11 5.86 5.85 5.91 5.45

fgt_2usd_w1 15.89 15.75 15.21 15.89 15.98 15.47 15.89 15.98 15.44 15.89 15.94 15.41 15.89 15.60 14.94

fgt_moderate_w1 31.29 31.19 30.62 31.29 31.34 30.77 31.29 31.38 30.86 31.29 31.30 30.76 31.29 31.11 30.44

fgt_extreme_w1 24.40 24.24 23.73 24.40 24.36 23.82 24.40 24.39 24.06 24.40 24.32 23.89 24.40 24.16 23.50

gini_ypc_w1 0.53 0.52 0.52 0.53 0.52 0.52 0.53 0.52 0.52 0.53 0.52 0.52 0.53 0.52 0.52

gini_ylab_w1 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.50 0.49 0.49 0.49 0.49 0.49 0.50

theil_ypc_w1 0.57 0.56 0.56 0.57 0.56 0.56 0.57 0.56 0.56 0.57 0.56 0.56 0.57 0.57 0.56

fgt_1.25usd_w2 5.85 5.50 3.03 5.85 5.54 3.92 5.85 5.32 3.18 5.85 5.43 3.30 5.85 4.59 2.34

fgt_2usd_w2 15.89 15.49 11.01 15.89 15.40 12.34 15.89 15.21 10.74 15.89 15.30 11.20 15.89 14.52 8.84

fgt_moderate_w2 31.29 30.73 24.02 31.29 30.56 26.07 31.29 30.17 23.67 31.29 30.29 24.14 31.29 29.48 20.59

fgt_extreme_w2 24.40 23.87 18.08 24.40 23.67 19.81 24.40 23.40 17.79 24.40 23.50 18.17 24.40 22.70 15.06

gini_ypc_w2 0.53 0.52 0.51 0.53 0.52 0.51 0.53 0.52 0.52 0.53 0.52 0.51 0.53 0.52 0.51

gini_ylab_w2 0.49 0.49 0.50 0.49 0.49 0.49 0.49 0.49 0.50 0.49 0.49 0.50 0.49 0.49 0.50

theil_ypc_w2 0.57 0.56 0.54 0.57 0.56 0.54 0.57 0.56 0.54 0.57 0.56 0.54 0.57 0.56 0.53

fgt_1.25usd_m 5.85 5.57 3.27 5.85 5.62 4.00 5.85 5.36 3.27 5.85 5.50 3.49 5.85 4.67 2.39

fgt_2usd_m 15.89 15.39 11.09 15.89 15.21 12.53 15.89 15.04 11.15 15.89 15.10 11.42 15.89 14.47 9.08

fgt_moderate_m 31.29 30.59 24.23 31.29 30.42 26.07 31.29 30.05 24.05 31.29 30.15 24.41 31.29 29.45 21.04

fgt_extreme_m 24.40 23.78 18.24 24.40 23.55 19.91 24.40 23.38 17.96 24.40 23.40 18.39 24.40 22.61 15.38

gini_ypc_m 0.53 0.52 0.51 0.53 0.52 0.51 0.53 0.52 0.51 0.53 0.52 0.51 0.53 0.52 0.51

gini_ylab_m 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.50 0.49 0.49 0.49 0.49 0.49 0.50

theil_ypc_m 0.57 0.56 0.53 0.57 0.56 0.54 0.57 0.56 0.54 0.57 0.56 0.54 0.57 0.56 0.53

Fuente: Cálculos del autor

Simulación BaseSimulación con Endeudamiento

DomésticoSimulación con Endeudamiento

ExternoSimulación con Recaudación

FiscalSimulación con Escenario

Infraestructura

Poverty and inequality Evolution for different financial scenarios.

67

¿Impact of public expenditure in new infrastructure?


-

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Pobreza de 1.25usd (PPP) con Efecto w2

68

0.440

0.460

0.480

0.500

0.520

0.540

0.560

0.580

Evolución de la Desigualdad con efecto M

gini_ypc_m gini_ylab_m theil_ypc_m

After effect W2, the effect that decreases poverty in second place is M, and also decreases the Theil inequality index.

¿Impact of public expenditure in new infrastructure and labor effects scenarios?


¿Do poverty goals are reached (MDG 1) in the base scenario while financing MDG 2, 4, 5 and 7ab?


-

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Pobreza $1.25USD PPP PRE CRISIS

fgt_1.25usd fgt_1.25usd_u fgt_1.25usd_s fgt_1.25usd_w1 fgt_1.25usd_w2 fgt_1.25usd_m

70


-

1.00

2.00

3.00

4.00

5.00

6.00

7.00 Pobreza $1.25USD PPP POST CRISIS

fgt_1.25usd fgt_1.25usd_u fgt_1.25usd_s fgt_1.25usd_w1 fgt_1.25usd_w2 fgt_1.25usd_m


71


The scenario that in 2015 increases poverty the most with respect to the base scenario is domestic debt.

Due to the negative effect that domestic debt has in the labor remunerations and then in food poverty.

Food poverty is reduced the most in the scenario with foreign debt financing , and if we incorporate the simulation W2, poverty decreases more, and in second place M that correspond to the composition of education of the employed population.

If workers achieve more years of schooling and MDG2 is reached, the wages increase and this decreases poverty .


72


In both poverty scenarios, 1.25 USD poverty does not decrease enough to reach the goal. Whereas food poverty does.

It can be observed that even when 1.25 USD poverty in 2008 is low, the post crisis scenario makes it not to decrease at the levels pre crisis.

For food poverty the model manage to decrease the 2008 level using additional expenditure financed by tax or foreign debt.

With respect to income inequality , the Gini coefficient shows the final result of 2015 for the different scenarios, that is lightly below for the financing with domestic debt, whereas Theil is slightly below in the scenario with foreign debt.

Again the estimations show that the employment effect that helps to decrease in a higher measure inequality is M, when the workers increase their skilled level.

http://ssc.sagepub.com/content/early/2010/05/12/0894439310370092.abstract


73

¿What type of drawback is observed in the evolution of MDGs as a result of the crisis?

The crisis decrease the economic wellbeing through a drawback in achieving the targets and in higher measure for maternal and child mortality Maternal mortality has an achieving measure of 83.6% with respect to the precrisis measure (drawback of 0.066, which represents 6600 more maternal deaths for every 100, 000 births).

For MDGs to be reachable , we estimated that it is required and additional annual expenditure of 3.28% of GDP in the most expensive scenario which is Government expenditure with domestic debt. This type of financing, even when n its costly, is the less distortive to macro economy because it has increasing rates of imports and exports, absorption and economic growth. Notwithstanding, it is not the one with less distortions in the labor market.


¿What type of drawback is observed in the evolution of MDGs as a result of the crisis?

I II III IV V IV/III V/III VI VII

odm1 0.108 0.041 0.021 0.000 0.015 Más allá 1.391 -0.021 -0.006 -0.015odm2 0.701 0.893 1.000 0.976 0.974 0.976 0.974 0.024 0.026 -0.00182odm4 0.442 0.250 0.147 0.138 0.153 1.067 0.966 -0.009 0.005 -0.014odm5 0.890 0.652 0.223 0.200 0.266 1.112 0.836 -0.022 0.044 -0.066odm7a 0.754 0.894 0.947 0.979 0.940 1.034 0.992 -0.032 0.007 -0.039odm7b 0.581 0.773 0.791 0.808 0.788 1.022 0.997 -0.017 0.002 -0.019

retrocesoretrocesoretrocesoretrocesoretroceso

Brecha con respecto a

( un número negativo implica que hemos

sobrepasado la meta)

VIII

Retroceso/ Avance entre la brecha precrisis y postcrisis

anticíclico

retroceso

Razón de alcance con respecto a la

meta

Escenario Base

postcrisis contracíclico

2015

Inicio 1990

Año Base 2003

Meta 2015

Escenario Base sin

crisis 2015


¿How much additional government expenditure is necessary to finance the MDG once we considered the effects of the crisis?

The public policy that we recommend is one that do not distorts the macro economy and would be effective in reaching MDG, in particular the financial scenario that is effective with maternal and child mortality.

Mexico may adopt a mix financial scenario because domestic debt is the best way to reach MDG, with non negative impacts at macro level, but has negative impact at micro level in the impact to workers remunerations.

The scenario with taxes, at the macro level decreases productivity but is the one which reduces poverty and inequality.

Both policies require and additional annual average increase of 5.88% GDP for the period of analysis.

So that if 2010 the expenditure in (education, primary health, water and sanitation) represented 19.7% of GDP (15.2% in public fix investment and 4.5% in government consumption), sit is required an annual increase of 5.88% of GDP.


¿Will the government have the possibility to finance the MDGs strategy in a sustainable way?


The financial policy with 58% increase in the economic package for 2009 is needed to reach MDGs under a new infrastructure scenarios, so it is not credible in the short run. Because it requires and increase in fiscal capacity to increase government revenue.

Domestic debt policy is not credible because the cash flow of debt to finance MDG is 60% of GDP.

Finally, external dent strategy to reach MDG is 3 times higher that what is allowed in the economic package, so it is not feasible.

77

Rodrigo

than?

¿Until which level the public expenditure required to finance the MDGs achievement will have a countercyclical effect on economic growth recovery?


The additional expenditure to reach the goals in 2015 is additional expenditure to the countercyclical policy established in the economic package of Mexico in 2009, and its positive implications are that absorption and GDP still growing at a sustainable rate given the government expenditure.

But the negative effect in the remunerations in the skilled workers may come from the redistribution effects that help more to the less qualify workers and those below the poverty line.

The effects in income inequality are ambiguous because on one hand the Gini coefficient which is more sensitive in the tails shows an increase whereas Theil shows a decrease in al scenarios.

78

¿How will this be linked to what government is currently implementing to decrease the effects of the crisis?

The estimated additional expenditure estimated using the CGE and the micro simulations is compatible with the economic package of 2009 but it is not enough to reach MDGs.

The public policies assumed by Mexican government are not enough to reach the achievement in maternal mortality.

All current financing should be increased. For example, the fiscal policy requires additional 58% established in the

economic package, but until Mexico develops an efficient taxation system , this measure cannot be successfully implemented..

Internal or external debt financing compared to the economic package , is low, it has to be increase by approximately 60% of GDP of internal debt and three times more for external debt financing. This make these financing strategies not feasible.


Conclusion

Using CGE modeling and micro simulation tools we find that MDGs will be reached in 2015, but the cost is very high because the Mexican Government will require an additional increase in the economic package.

A mixed financial strategy that includes domestic debt and fiscal policy is the best option because causes less negative distortions to macro and micro economy..

One source of financing is not recommended. Fiscal policy only requires a 58% increase the economic package. Reaching MDG implies that population should live free from poverty,

free from high mortality rates and will have higher levels of health and education, where income inequality gaps will be low..


Annex

THANKS


EFFECTS IN THE LABOUR FORCE WHEN REACHING MDGs

Araceli Ortega [email protected] Unidades Cientos de Miles

1650

1750

1850

1950

2050

2150

2250

2350

2003 2005 2007 2009 2011 2013 2015

10 0

00 T

raba

jado

res

BAU Donaciones Externas para Financiar Todos los ODM

Recaudación de Impuestos para Financiar Todos los ODM Deuda Externa para Financiar Todos los ODM

Deuda Interna para Financiar Todos los ODM

Oferta de Trabajadores No Calificados

82


Araceli Ortega [email protected] Cientos de Miles

Oferta de Trabajadores Calificados

700

800

900

1000

1100

1200

1300

1400

1500

2003 2005 2007 2009 2011 2013 2015

10 0

00 tr

abaj

ador

es

BAU Donaciones Externas para Financiar Todos los ODM

Recaudación de Impuestos para Financiar Todos los ODM Deuda Externa para Financiar Todos los ODM

Deuda Interna para Financiar Todos los ODM

83



0

100

200

300

400

500

600

700

2003 2005 2007 2009 2011 2013 2015

(10

00

0 t

rab

aja

do

res

)

Agricultura Minería Industria Servicios Educación Salud Agua Infraestructura Gobierno

Servicios

Infraestructura

Agricultura

Industria

Educación

Gobierno

Demanda de Trabajadores No Calificados por Actividad

84



0

100

200

300

400

2003 2005 2007 2009 2011 2013 2015

10

00

0 t

rab

aja

do

res

Agricultura Minería Industria Servicios Educación Salud Agua Infraestructura Gobierno

Servicios

Infraestructura

Agricultura

Industria

Educación

Gobierno


Demanda de Trabajadores Calificados por Actividad

85



1.8

1.9

2

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

2003 2005 2007 2009 2011 2013 2015

10

00

0 p

es

os

BAUDonaciones Externas para Financiar Educación PrimariaRecaudación de Impuestos para Financiar Educación PrimariaDeuda Externa para Financiar Educación PrimariaDeuda Interna para Financiar Educación PrimariaFuente: Estimación de los autores

Remuneración Promedio de Trabajadores No Calificados

86



20

20.2

20.4

20.6

20.8

21

21.2

21.4

21.6

21.8

22

22.2

22.4

22.6

2003 2005 2007 2009 2011 2013 2015

10 0

00 p

esos

BAU

Donaciones Externas para Financiar Educación Primaria

Recaudación de Impuestos para Financiar Educación Primaria

Deuda Externa para Financiar Educación Primaria

Deuda Interna para Financiar Educación PrimariaFuente: Estimaciones de los autores

Remuneración Promedio de Trabajadores Calificados

87

Labor Market: Remunerations, Poverty and Inequality


Evolución de las remuneraciones bajo distintos escenarios de politicas para alcanzar todos los ODM

0

50

100

150

200

250

300

350

400

450

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mile

s de

Pes

os

Calif icados

Semi-Calif icados

No Calif icados

88

Documents

“ World Crisis and MDG’s achievement in Mexico : A CGE Model”