Fiscal Policy, Stabilization, and Growth: Prudence Or Abstinence?
Guillermo Perry, Luis Serven, Rodrigo Suescun
World Bank, 2008 - Business & Economics - 329 pages
Fiscal policy in Latin America has been guided primarily by short-term liquidity targets whose observance was taken as the main exponent of fiscal prudence, with attention focused almost exclusively on the levels of public debt and the cash deficit. Very little attention was paid to the effects of fiscal policy on growth and on macroeconomic volatility over the cycle. Important issues such as the composition of public expenditures (and its effects on growth), the ability of fiscal policy to stabilize cyclical fluctuations, and the currency composition of public debt were largely neglected. As a result, fiscal policy has often amplified cyclical volatility and dampened growth. 'Fiscal Policy, Stabilization, and Growth' explores the conduct of fiscal policy in Latin America and its consequences for macroeconomic stability and long-term growth. In particular, the book highlights the procyclical and anti-investment biases embedded in the region's fiscal policies, explores their causes and macroeconomic consequences, and asesses their possible solutions.
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Accrual Accounting LongTerm Fiscal Projections
Fiscal Discipline Volatility and Growth
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accrual accounting aggregate analysis Argentina assets automatic stabilizers balance behavior bias biases booms Brazil budgetary business cycle capital budget cash flows changes Chile Colombia consumption cost countercyclical debt finance deficit depreciation developing countries discretionary fiscal policy Economic effect elasticity equation estimates example Fatas and Mihov federal figure fiscal adjustment fiscal federalism fiscal rules fluctuations Fund future golden rule government spending government's impact income tax increase industrial countries infrastructure capital infrastructure investment institutional interest rate International Monetary Fund LAC region Latin America limit long-term macroeconomic measures ment model economy nontradable OECD output volatility overall Pact Paper parameter percent of GDP Perotti political constraints primary procyclical fiscal policy procyclicality of fiscal projects provinces public capital public debt public investment public sector regression Serven shocks significant solvency Source structural subnational governments Suescun surplus Talvi targets tax revenues tion transfers variables World Bank worth