The Role of Fiscal Policy in Sustainable Stabilization: Evidence From Latin America

August 1, 1997

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Gerd Schwartz, and Teresa Ter-Minassian. The Role of Fiscal Policy in Sustainable Stabilization: Evidence From Latin America, (USA: International Monetary Fund, 1997) accessed November 9, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper reviews the role of fiscal policy in a number of stabilization programs in Latin America since the early 1980s. The paper highlights the importance of sustainable fiscal adjustment in stabilization efforts, and discusses the main issues that arise in this context. By reviewing the Latin American experience, it is argued that responsibility for failed stabilization attempts can be traced to four main factors: inconsistent policy mixes; excessive reliance on temporary factors of improvement in the fiscal accounts; failure to implement fundamental fiscal reforms; and lack of complementary structural reforms.

Subject: Expenditure, Fiscal consolidation, Fiscal policy, Inflation, Prices, Revenue administration

Keywords: Allocation problem, Country, Expenditure management systems, Expenditure reform, Fiscal consolidation, Fiscal policy, Foreign currency, Global, Government, Inflation, Latin America, Latin American country, Nominal exchange rate, Reform, Revenue, Stabilization, Tanzi effect, WP

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1997/094
Stock No:

WPIEA0941997
ISBN:

9781451950786
ISSN:

1018-5941

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