Toward a low carbon growth in Mexico : is a double dividend possible ? A dynamic general equilibrium assessment

We build an agent-based model populated by households with heterogenous and time-varying nancial conditions in order to study how scal multipliers can change over the business cycle and are a ected by the state of credit markets. We nd that deficit-spending scal policy dampens the e ect of bankruptcy shocks and lowers their persistence. Moreover, the size and dynamics of government spending multipli- ers are related to the degree and persistence of credit rationing in the economy. On the contrary, in presence of balanced-budget rules, output permanently falls below pre-shock levels and the ensuing multipliers fall below one and are much lower than the ones emerging from the deficit-spending policy. Finally, we show that di erent conditions in the credit market significantly a ect the size and the evolution of fiscal multipliers