Edited by Guillermo E. Perry, Luis Servén, Rodrigo Suescún
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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