Transitioning towards a low-carbon economy in Mexico
Abstract
This document offers an empirical application of the notion of energy transition to the Mexican
economy and it takes the next step of simulating medium- and long-term impacts of proposed
and future energy and fiscal policy on the environment and the Mexican economy. The starting
point of the analysis is the ThreeME framework, a Multi-sectoral Macroeconomic Model based
on Keynesian theory. It is designed to address the dynamics of global economic activity, energy
system development and carbon emissions causing climate change. The ThreeME model is well-
suited for policy assessment purposes in the context of developing economies as it informs the
transitional effects of policy intervention. In particular, disequilibrium can arise in the form of
involuntary unemployment, the inertia of technical systems and rigidity in labor and energy markets
as a result of delayed market clearing in the goods markets and slow adjustment between prices and
quantities over the simulation time path.
Domains
Economics and Finance
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