Discussion Paper

No. 2010-24 | October 29, 2010
Fiscal Policy in Latin America: Better After All?
(Submitted as Policy Paper)

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.

JEL Classification

E62 H30 H60

Cite As

Christian Daude, Ángel Melguizo, and Alejandro Neut (2010). Fiscal Policy in Latin America: Better After All?. Economics Discussion Papers, No 2010-24, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2010-24

Assessment



Comments and Questions


Eduardo Fernandez-Arias - Invited Reader Comment
December 17, 2010 - 11:54

See attached file


Christian Daude - Reply to comments
February 10, 2011 - 16:52

Thank you very much for your helpful and constructive comments.
Please see our detailed replies in the attached file.


Juan Pablo Jiménez - Invited Reader Comment
December 29, 2010 - 14:35

Christian Daude - Reply to comments
February 10, 2011 - 16:55

Thank you very much for these helpful and constructive comments.
Please find a detailed answer to them in the attached file.


Christian Daude - Revised version of the paper
February 10, 2011 - 16:58

Here is a revised version of the paper that incorporates several of the changes suggested by Fernandez-Arias as well as Lopez, Jimenez and Cabello.