Budget Rigidity in Latin America and the Caribbean : Causes, Consequences, and Policy Implications

Language: English

Published by World Bank Publications Apr 2020, 2020

1464815208 / 9781464815201

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Seller: AHA-BUCH GmbH, Einbeck, GermanyAHA-BUCH GmbH

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Neuware - Policy makers in Latin America and the Caribbean (LAC) often complain that poor fiscal performance in their countries is a result of a high degree of spending rigidity. Despite being a common complaint, the issue has remained largely ignored by the literature because of the lack of adequate measures of rigidity that allow cross-country and time series comparability. This report helps close this gap by introducing a new measure of spending rigidities that can be easily applied to multiple countries. It focuses on the categories of spending that are naturally inflexible--wages, pensions, transfers to subnational governments, and debt service--and separates them into two components: structural and nonstructural.The structural component is determined by economic, demographic, and institutional fundamentals. The nonstructural component is determined by short-run transitory factors associated with business and political cycles. The degree of rigidity of spending is then proxied by the ratio of structural spending to total spending, with a higher value indicating that spending is driven mostly by factors out of the policy makers' control.This concept of rigidity was applied to 120 countries for the years 200017 and produced several interesting results: Advanced economies and developing countries in other regions have higher levels of rigidity than countries in LAC. The sources of rigidity vary by country. Higher rigidity is associated with higher spending levels, higher tax rates, higher public debt, and lower efficiency of public spending. Rigidity has pervasive effects on fiscal sustainability, increasing the country's financing needs and reducing the probability of the country starting a fiscal adjustment.Given these pervasive effects of spending rigidity, the report concludes by discussing several policies to contain the sources of rigidity in the long term, ranging from the importance of deepening the pension reform process to the need of establishing strong fiscal institutions promoting medium-term fiscal planning.…

Seller Inventory # 9781464815201

Title
Budget Rigidity in Latin America and the Caribbean : Causes, Consequences, and Policy Implications
Author
Santiago Herrera
Publisher
World Bank Publications Apr 2020
Publication year
2020
Condition
Neu
Binding
Taschenbuch
Language
English
ISBN 10
1464815208
ISBN 13
9781464815201
Item weight
186 grams
Dimensions
279x216x4 mm

AHA-BUCH GmbH

Einbeck, Germany

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