Fiscal Policy in Latin America: Countercyclical and Sustainable?

Daude, Christian; Melguizo, Ángel; Neut, Alejandro

doi:10.5018/economics-ejournal.ja.2011-14

Cited by 23 publications

(29 citation statements)

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“…Political and cultural exchange or shared religious beliefs may contribute to regionally similar views on the state, its relations to society and the functions it should perform. A common colonial heritage (such as in Latin America or in parts of sub-Saharan Africa) could also lead to a certain assimilation of taxation patterns -even more so if it is connected to specific economic structures and patterns of world market integration (Mkandawire 2010, Daude et al 2011.…”

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confidence: 99%

A Comparative View on the Tax Performance of Developing Countries: Regional Patterns, Non-Tax Revenue and Governance

Haldenwang

Ivanyna

2012

Economics

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Some countries fail to ensure that their citizens and businesses make an appropriate contribution to the financing of public tasks. But not all countries with a low tax ratio automatically fall into this category. This paper presents an approach to bridge the gap between probabilistic statements based on statistical analyses, and country-specific information. Rather than defining general across-the-board criteria, the approach accounts for different development levels and other influencing factors, such as regional patterns, non-tax revenue and governance. Findings on individual countries or groups of countries should put governments, donors and international organisations in a better position to decide on tax reform programmes and aid modalities. JEL H20, O23, O19Keywords Tax system; tax ratio; governance; developing countries Correspondence Christian von Haldenwang, political scientist and senior researcher, German Development Institute (Deutsches Institut für Entwicklungspolitik, DIE), Bonn, Germany; Email address: christian.vonHaldenwang@die-gdi.de Maksym Ivanyna, Joint Vienna Institute, Michigan State University; Email address: ivanynam@msu.edu Citation Christian von Haldenwang and Maksym Ivanyna (2012). A Comparative View on the Tax Performance of Developing Countries: Regional Patterns, Non-Tax Revenue and Governance. Economics: The Open-Access, Open-Assessment E-Journal, Vol. 6, 2012-32. http IntroductionPressure is mounting for countries with low tax yields or lax enforcement of tax laws. International players as the Organisation for Economic Co-operation and Development (OECD), the World Bank and the G20 are calling for more determined action to combat tax evasion and avoidance. With the world still fighting the effects of the global financial and economic crisis, there is growing pressure on tax havens to increase the transparency of their tax systems and put an end to unfair competitive practices. Developing countries, too, are being urged to do more to mobilize domestic resources rather than rely on a constant inflow of official development assistance (ODA) funds (OECD 2010; European Commission 2010). Some countries clearly fail to ensure that their citizens and businesses make an appropriate contribution to the financing of public tasks. In such cases there are a number of reasons for changing the development portfolio, reducing ODA or even stopping cooperation altogether. But not all countries with a low tax ratio automatically fall into this category. Governments, donors and international organizations need to be able to assess the performance of tax systems in a broader context of development, governance and international cooperation.The most important providers of this kind of information are the World Bank's Country Policy and Institutional Assessments (CPIAs) and Doing Business Reports, the OECD reports and databases, especially on sub-Saharan Africa, the European Commission's Fiscal Blueprints, the Public Expenditure and Financial Accountability (PEFA) Reports and the Collecting T...

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A Comparative View on the Tax Performance of Developing Countries: Regional Patterns, Non-Tax Revenue and Governance

Haldenwang

Ivanyna

2012

Economics

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“…Some advances in fiscal policy-making have been significant since the 2000s. According to Daude et al (2011), from a structural perspective, both cyclically-adjusted balances and debt sustainability analysis confirm the better position enjoyed by most countries in Latin America before the crisis. These good practices in the stabilising role of fiscal policy (notably in Chile, Colombia, and Peru), and in general in fiscal sustainability, stem from a combination of welldesigned fiscal rules, better institutions, and good policy makers.…”

Section: Infrastructure In Fiscal Rules In Latin America With a Focumentioning

confidence: 92%

“…Source: Authors' calculations based on Calderón and Servén (2010), Daude et al (2011), ECLAC and IMF databases.…”

Section: Budget Balance Cyclically-adjusted Primary Balancementioning

confidence: 99%

“…However, with the exception of Brazil, Latin America has not completely decoupled in this sense, such that in some cases a considerable fiscal consolidation is needed in the years ahead. According to Daude et al (2011), cyclically-adjusted primary balance should increase between 2 and 4 percentage points of GDP to stabilise debt at pre-crisis levels. 6 In a similar exercise, OECD (2010) estimates that the required fiscal adjustment in industrialised economies is higher than 5 percentage points of GDP (Figure 8).…”

Section: Public Infrastructure Investment Fiscal Perspectives and Frmentioning

confidence: 99%

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Public infrastructure investment and fiscal sustainability in Latin America: incompatible goals?

Carranza

Daude

Melguizo

2014

Journal of Economic Studies

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Latin American countries exhibit a significant gap in infrastructure stocks, due to low and in many cases inefficient public investment, which is furthermore not compensated by private sector projects. In this paper we analyse trends in public and total infrastructure investment in six large Latin American economies, in the light of fiscal developments since the early eighties. We argue that post-crisis fiscal frameworks, notably fiscal rules which are increasingly popular in the region, should not only consolidate the recent progress towards debt sustainability, but also create the fiscal space to close these infrastructure gaps. These points are illustrated in a detailed account of recent developments in the fiscal framework and public investment in the Peruvian case.

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“…Against this historical background, the last decade witnessed significant changes in the fiscal policies of several countries in the region: average deficits declined steadily, debt ratios improved, and, in contrast to previous crisis episodes, some countries were able to implement effective countercyclical fiscal policy during the global economic downturn of 2008-09 (IMF 2015Klemm 2014;Daude et al, 2010). 2 Starting with Gavin and Perotti (1997), an important literature has shown the region's propensity towards procyclical behavior (Kaminsky et al 2004;Akitoby et al 2006;Clements et al 2007;Klemm 2014).…”

Section: Thementioning

confidence: 99%

Structural Fiscal Balances in Latin America and the Caribbean: New Dataset and Estimations

Ardanaz

Corbacho²,

Gonzales³

et al. 2015

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work is licensed under a Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives (CC-IGO BY-NC-ND 3.0 IGO) license (http://creativecommons.org/ licenses/by-nc-nd/3.0/igo/legalcode) and may be reproduced with attribution to the IDB and for any noncommercial purpose, as provided below. No derivative work is allowed.Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license.Following a peer review process, and with previous written consent by the Inter-American Development Bank (IDB), a revised version of this work may also be reproduced in any academic journal, including those indexed by the American Economic Association's EconLit, provided that the IDB is credited and that the author(s) receive no income from the publication. Therefore, the restriction to receive income from such publication shall only extend to the publication's author(s). With regard to such restriction, in case of any inconsistency between the Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives license and these statements, the latter shall prevail.Note that link provided above includes additional terms and conditions of the license.The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent.http://www.iadb.org 2015 Abstract * In recent years, an increasing number of countries have began anchoring their fiscal policy frameworks in terms of rules that target the cyclically adjusted or structural (as opposed to actual) balance in an effort to overcome problems of procyclicality and fiscal volatility. The logic for doing so is in principle compelling: rule-based fiscal policies allow automatic stabilizers to work freely during the cycle and help accumulate fiscal surpluses in good times. However, the estimation of structural balances is subject to a number of methodological challenges, including the degree of estimation uncertainty. This paper presents a range of estimates of the structural budget balance and uses them to analyze the cyclical behavior of fiscal policy in Latin America and the Caribbean. Based on an original dataset comprising detailed fiscal information from 20 countries across the region between 1990 and 2013 ** , the paper finds that the range of estimates can be large for some countries, especially those that derive substantial fiscal revenue from commodity-related activities. In addition, the evidence shows that on average, the region has followed a procyclical policy pattern: a 1 percent increase in the output gap is associated with up to a 0.66 percentage point deterioration in the structural primary balance. This pattern hides substanti...

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Fiscal Policy in Latin America: Countercyclical and Sustainable?

Cited by 23 publications

References 16 publications

A Comparative View on the Tax Performance of Developing Countries: Regional Patterns, Non-Tax Revenue and Governance

A Comparative View on the Tax Performance of Developing Countries: Regional Patterns, Non-Tax Revenue and Governance

Public infrastructure investment and fiscal sustainability in Latin America: incompatible goals?

Structural Fiscal Balances in Latin America and the Caribbean: New Dataset and Estimations

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