Fiscal Policy in Latin America: Countercyclical and Sustainable at Last?

36 Pages Posted: 14 Jan 2012

See all articles by Christian Daude

Christian Daude

affiliation not provided to SSRN

Ángel Melguizo

AT&T Latin America

Alejandro Neut

Organization for Economic Co-Operation and Development (OECD)

Date Written: March 25, 2010

Abstract

This paper analyses fiscal policy for several economies in Latin America, from the early Nineties to the 2009 crisis. We present original estimates of cyclically-adjusted public revenues for Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Peru and Uruguay implementing the standardised OECD methodology and extending it to include commodity cycles, which have a direct and significant effect on the fiscal balance of several Latin American countries. Based on these estimates, we evaluate the size of automatic tax stabilisers and the cyclicality of discretionary fiscal policy. Additionally, we highlight the uncertainty stemming from the estimation of the output gap, due to large and simultaneous cyclical, temporary and permanent shocks in several Latin American economies.

Keywords: fiscal policy, business cycle, public finances

JEL Classification: E62, H30, H60

Suggested Citation

Daude, Christian and Melguizo, Ángel and Neut, Alejandro, Fiscal Policy in Latin America: Countercyclical and Sustainable at Last? (March 25, 2010). Available at SSRN: https://ssrn.com/abstract=1985188 or http://dx.doi.org/10.2139/ssrn.1985188

Christian Daude

affiliation not provided to SSRN ( email )

Ángel Melguizo (Contact Author)

AT&T Latin America ( email )

Bogota
Colombia

Alejandro Neut

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

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