Fiscal policy and private investment: latin america in a comparative perspective

Abstract

The main objective of the paper is to assess the impact of fiscal variables on private investment comparing some Latin-American economies to other advanced ones. For such purposes, the authors carry out an econometric analysis for the period 1990-2008. They make use of two dynamic panel models in which they group countries with similar characteristics and development levels. In one of them, they include Mexico, Brazil, Chile, Colombia and Uruguay; whereas in the second one the countries accounted for are the U.S., Canada, Spain, Korea, Ireland and Japan. They specify in both models an investment function using as arguments a wide range of variables, including those related with fiscal policy. From their results the authors infer that governments can, with higher spending, boost up the economy even when they finance spending with higher taxes. In Latin America, where income concentration is enormous, a proposal to boost up the economy through higher government expenditure financed with a progressive income tax, is even more justified

Having It Both Ways: Can Latin American Spend More Money on Innovation and Reduce Income Inequality?

“…During the neo‐developmentalist period, as a result of economic growth and more‐targeted cash transfers, overall poverty fell from 44% in 2002 to 33% in 2008. Poverty is a complex problem for Latin America (Astorga, , p. 3; Caballero & Lopez, ; Grunewald & Martinez‐Zarzoso, , pp. 7–9; Hartmann, Pyka, & Hanusch, , p. 71; Herzer, Huhne, & Nunnenkamp, , p. 790; Kozameh & Ray, , p. 22; Lemarchand, , p. 29; Nudelsman, , pp.…”

“…From 1990 to 2003, Chile’s taxation as a percentage of GDP was 18% on average, Mexico was floated at approximately 10%, Argentina fluctuated between 15% and 17% over the same period, Peru averaged 13%, while Colombia averaged 28%. These figures exclude resource rent revenue (Caballero & Lopez, , pp. 242, 243; de Mello & Mulder, , pp.…”