Mexico | How sensitive is GDP to public spending?

Summary

The findings of this document seem to confirm that fiscal policy in Mexico has been procyclical in the period spanning from 1993 to 2019.

Key points

• Key points:
• There is a lot of uncertainty around the impact on GDP of public spending during the phase of economic expansion, which explains why its effect is not statistically different from zero.
• In contrast, the fiscal multiplier of public spending is positive and statistically different from zero for recession periods.
• It would be convenient if fiscal policy did a 180-degree turn and became countercyclical to help dampen sizable economic fluctuations.

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