Front Matter Page

Western Hemisphere Department

Contents

  • I. Introduction

  • II. Desired (Near-Term) Policy Response to Covid-19

    • A. How much does the near-term policy response cost?

  • III. Medium –Term Fiscal Reforms

    • A. Increase Tax Capacity

    • B. Raise Public Investment

    • C. Strengthen Social Safety Nets and Unemployment Insurance

  • IV. Macroeconomic Impact of the Proposed Package

    • A. The “fiscal twist” package

    • B. Model Results

  • V. Conclusion

  • Figures

  • Figure 1. Fiscal Measures in Response to the Covid-19 Pandemic

  • Figure 2. Emergency Lifelines in 2020 versus Announced Discretionary Stimulus in 2009

  • Figure 3. The Role of Fiscal Policy at Different Stages of the Crisis

  • Figure 4. Additional Health Spending in Response to Covid-19

  • Figure 5. Public Health Expenditure

  • Figure 6. Pre-Covid-19 Health Capacity

  • Figure 7. Social Assistance Spending

  • Figure 8. Cash Transfers to Informal Workers

  • Figure 9. Decomposition of Total Tax Revenue

  • Figure 10. Components of the Tax Gap

  • Figure 11. Benefits from Zero-Rated VAT on Food, by Income Decile

  • Figure 12. Average PIT Rates

  • Figure 13. Progressivity of PIT

  • Figure 14. Bottom and Top PIT Brackets

  • Figure 15. Corporate Income Tax Rates and Productivity

  • Figure 16. Property Tax Revenue

  • Figure 17. Public Gross Fixed Capital Formation

  • Figure 18. Coverage and Adequacy of Social Safety Net Programs by Quintile

  • Figure 19. Targeting of Social Safety Net Programs by Quintile

  • Figure 20. Composition of SSNs

  • Figure 21. Poverty Reduction Impact of SSNs

  • Figure 22. Macroeconomic Effects of the Fiscal Package

  • Figure 23. Impact of Proposed Fiscal Package

  • Boxes

  • Box 1. Government’s Fiscal Response to Covid-19

  • Box 2. The Global Integrated Monetary and Fiscal Model (GIMF)

  • Tables

  • Table 1. Estimated Cost of Key Measures

  • Table 2. Epidemiological Parameters

  • Table 3. Tax Expenditures (Percent of GDP)

  • Table 4. Model Inputs for GIMF Simulation

Mexico Needs a Fiscal Twist: Response to Covid-19 and Beyond
Author: Mrs. Swarnali A Hannan, Ms. Keiko Honjo, and Mr. Mehdi Raissi