Back Matter

Author(s):
Erik Offerdal, and Robert Rennhack
Published Date:
August 2004
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    Index

    accountability

    • governance, 131, 132, 133, 136

    • public spending, 131

    • social safety nets, 124

    • see also transparency

    accounting

    • creative, 31

    • public debt accounting framework, 2–5, 35–7

    agricultural trade, 156–9, 165

    Anand, R., 35–6

    Antigua and Barbuda, exchange rate regime, 172, 177

    Argentina

    • capital gains, 76

    • currency board collapse, 199

    • education spending, 108

    • enterprise income tax, 62, 66

    • external debt, 14

    • fiscal crisis, 16, 17, 199

    • health system, 117

    • net worth or assets tax, 80

    • nontariff measures, 151

    • personal income tax, 68, 72

    • returns to education, 100

    • tariffs, 149, 150

    • tax structure, 45–6, 49–50

    • value-added tax, 52, 56

    • withholding taxes on foreign remittances, 78

    Asian financial crisis, 18, 125

    assets

    • dollarization, 162, 163, 198–9, 201, 202, 205n2

    • liquidity risk, 198–9

    • public debt accounting, 3

    • tax on, 77, 80–1

    Australia, exchange rate regime, 175

    Bahamas, exchange rate regime, 169, 172, 177, 184

    balance sheet approach, 3

    balanced-budget rule, 30, 31, 32–4

    banking

    • consolidated supervision, xiii

    • contingent liabilities, 20–1

    • currency devaluations, 199–200

    • dollar liabilities, 198, 199, 201

    • lender of last resort, 163, 165, 199

    • liquidity risk, 198–200, 201–2

    • state-owned banks, 16

    • viable, 35

    Barbados

    • exchange rate regime, 169, 172, 177, 184

    • value-added tax, 55

    Bedi, Arjun S., 99, 110–11

    Behrman, Jere R., 99

    Belize, exchange rate regime, 169, 172, 177, 183, 184

    Birdsall, N., 99

    Bolivia

    • capital gains, 76

    • dollarization, 198, 205n8

    • enterprise income tax, 62, 66

    • external debt, 14

    • net worth or assets tax, 80

    • personal income tax, 67, 68, 72

    • returns to education, 100

    • tariffs, 149, 150

    • tax structure, 45–6, 49–50

    • US remittances, 160

    • value-added tax, 52, 56

    • withholding taxes on foreign remittances, 78

    borrowing

    • dollarization, 196, 197, 199–200, 201

    • fiscal rules, 30

    • public debt, 2, 3–4, 5, 16, 29, 35

    Bosnia-Herzegovina, dollarization, 205n9

    Brazil

    • capital gains, 76

    • enterprise income tax, 62, 66

    • external debt, 14–15

    • fiscal crisis, 17, 18

    • health system, 117

    • net worth or assets tax, 80

    • nontariff measures, 151

    • personal income tax, 68, 72

    • returns to education, 99, 100

    • tariffs, 149, 150

    • tax structure, 45–6, 49–50

    • teacher wages, 111

    • US remittances, 160

    • value-added tax, 52, 56

    • withholding taxes on foreign remittances, 78

    Canada

    • deficit rule, 30

    • exchange rate regime, 175

    capital account crises, 16

    capital controls, 176–8, 179, 180–1

    capital gains tax, 74, 75, 76

    capital market deepening, 35

    capital mobility, 159–60, 170, 174, 180, 181, 182

    Card, David, 98

    Caribbean

    • exchange rate regimes in CAC region, 169–86

    • health system, 117

    • tax system, 51

    • value-added tax, 55, 83

    Caribbean Basin Initiative (CBI), 142, 152, 156, 166n4

    Case, Anne, 99

    cash transfers, 124–5, 126–9, 130

    CBI see Caribbean Basin Initiative

    Central American Common Market, 41

    Central American Monetary Council, xii

    Chile

    • capital gains, 76

    • enterprise income tax, 62, 66

    • external debt, 15

    • net worth or assets tax, 80

    • nontariff measures, 151

    • personal income tax, 68, 72

    • returns to education, 100

    • tariffs, 149, 150

    • tax structure, 45–6, 49–50

    • value-added tax, 52, 56

    • withholding taxes on foreign remittances, 78

    Colombia

    • capital gains, 76

    • education spending, 108

    • enterprise income tax, 62, 66

    • net worth or assets tax, 80

    • nontariff measures, 151

    • personal income tax, 67, 68, 72

    • tariffs, 149, 150

    • tax structure, 45–6, 49–50

    • US remittances, 160

    • value-added tax, 52, 56

    • withholding taxes on foreign remittances, 78

    consumption

    • government, 96

    • poverty measurement, 136n7

    • value-added tax, 55, 57

    contagion, 2

    Corbacho, Ana, 87–141

    corporate (enterprise) income tax, 48, 58, 62–7, 71, 74–5, 77, 84

    corruption, 42, 125, 131, 132–4, 136

    Costa Rica

    • dollarization, 162, 195

    • education: attainment, 101, 103; drop-out and repetition rates, 106; government spending on, 105, 107, 108, 109, 110; returns to investment, 100; student-teacher ratios, 113;

    • teacher quality, 112, 113

    • emerging market status, 2

    Eurobonds, 37n2

    exchange rate regime, 169, 171, 172, 175, 177, 182, 183

    financial openness, 160

    fiscal impulse and capacity utilization, 25

    foreign exchange deposits, 195

    governance indicators, 132, 133

    gross national income, 88, 89

    health: government spending on, 119, 121, 123; system, 117, 118, 121, 122; trends in health status, 115, 116

    poverty and inequality, 89, 90, 91, 92, 93

    public debt: external, 13; fiscal sector developments, 22; GDP-debt ratio, 2, 5, 6, 8; interest rates on, 19; key macroeconomic indicators, 10; primary balance and gross financing requirement, 20; revenue and expenditure elasticities, 24; vulnerability to shocks, 19, 39n22

    public expenditure, 94–5, 96

    response to US growth rate, 161

    social safety nets, 124, 126, 130

    taxation: capital gains tax, 75, 76; enterprise income tax, 62–3, 65, 66; excise taxes, 59–61; exemption levels, 71; on interest, 75 net worth or assets tax, 77, 80; personal income tax, 68–9, 71, 72–3; tax structure, 45–6, 49–50; value-added tax, 51–6, 57; withholding taxes on foreign remittances, 78

    trade: estimated fiscal effect of FTA with United States, 164; exports, 143–5, 146; foreign investment flows, 153, 154; and growth, 153, 155; imports, 147; indicators, 143, 144; NAFTA, 151, 152; nontariff measures, 151; tariffs, 148, 149, 150, 158

    creative accounting, 31

    credibility

    • currency, 202, 203

    • fiscal rules, 31

    • monetary, 143, 162, 163

    credit risk, 199, 200

    Cuba, US remittances, 160

    currency

    • de-dollarization, 198, 202

    • devaluations, 16, 162, 199–200, 201

    • dual-currency regime, 195, 204

    • market acceptance of local currency, 203

    • Optimum Currency Area, 142–3, 159, 163

    • substitution, 171

    • see also depreciation; dollarization; exchange rate

    currency boards, 170, 171, 199, 204

    customs

    • tax harmonization, 41

    • weak administration, 42

    Czech Republic

    • dollarization, 198

    • fiscal crisis, 16, 17

    Davoodi, Hamid R., 87–141

    De Ferranti, D., 155

    De Nicolo, Gianni, 205n3

    de-dollarization, 198, 202

    debt, xii, xiii, 1–40

    • accounting framework, 2–5, 35–7

    • adverse shocks impact on fiscal adjustment, 26–30

    • crisis, 16

    • debt management policy, 35

    • debt rule, 30, 31, 32–4

    • external, 12, 13–15, 16, 38nl2

    • factors behind recent developments, 5–12

    • fiscal rules, 30–4

    • fiscal vulnerabilities, 18–26

    • interest service, 2, 4, 5, 29, 35, 38n9

    • level of, 12–18

    • rescheduling, 4, 5, 12

    debt stock operations, 4–5, 12, 20–1, 32–4

    deficit rules, 30

    depreciation

    • adverse shocks and fiscal adjustment, 27, 28, 29, 30, 32–3

    • dollarization, 197, 199, 201, 202, 203

    • see also currency

    discretion

    • fiscal rules, 30–1, 32

    • governance issues, 131, 132, 136

    • tax system, 42

    diversification

    • exchange rate regimes, 171, 174, 176–9, 180, 181, 182

    • export, 19, 143, 155, 174

    dividends, 74–5, 77

    Doha Round, xiii, 142, 158

    dollarization, xiii, 37n5, 143, 194–206

    • asset, 162, 163

    • CAC exchange rate regimes, 170, 171, 174

    • El Salvador, 38nl6, 169, 174, 179, 195

    • financial, 196–7, 198–200

    • liability, 162–3

    • monetary integration, 162, 164, 165

    • Panamá, 162, 169, 171–4, 179, 195

    • payments, 196, 198

    • real, 196, 197–8, 199

    • types and roots, 196–8

    Dominica, exchange rate regime, 172, 177

    Dominican Republic

    • education: attainment, 101, 103; drop-out and repetition rates, 106; government spending on, 105, 107, 109, 110; teacher quality, 112

    • emerging market status, 2

    • Eurobonds, 37n2

    • exchange rate regime, 171, 173, 175, 178, 183

    • financial openness, 160

    • governance indicators, 133, 134

    • gross national income, 88, 89

    • health: government spending on, 119, 121, 123; system, 118, 122; trends in health status, 115, 116, 117

    • IMF emergency assistance, 90

    • poverty and inequality, 89, 90

    • public debt: external, 13; fiscal sector developments, 22 GDP-debt ratio, 5, 6, 8; key macroeconomic indicators, 10; primary balance and gross financing requirement, 20, 39n25; revenue and expenditure elasticities, 24; vulnerability to shocks, 19

    • public expenditure, 94–5, 96

    • response to US growth rate, 161

    • social safety nets, 124–5, 127

    • taxation: capital gains tax, 75, 76; enterprise income tax, 62–3, 65, 66; excise taxes, 59–61; on interest, 75; low revenues, 21; net worth or assets tax, 80; personal income tax, 68–9, 72–3; tax structure, 45–6, 49–50; value-added tax, 51–6, 57; withholding taxes on foreign remittances, 78

    • trade: exports, 144–5, 146; foreign investment flows, 153, 154; imports, 147; indicators, 143, 144; NAFTA, 151; tariffs, 148, 149, 150

    • US remittances, 159, 160

    double taxation, 74, 75

    drop-out rates, 104, 105, 106

    dual-currency regime, 195, 204

    • see also dollarization

    economic growth see growth

    Ecuador

    • capital gains, 76

    • enterprise income tax, 62, 66

    • external debt, 15

    • fiscal crisis, 17, 18, 21

    • net worth or assets tax, 80

    • personal income tax, 68, 72

    • tariffs, 149, 150

    • tax structure, 45–6, 49–50

    • US remittances, 160

    • value-added tax, 52, 56

    • withholding taxes on foreign remittances, 78

    education, 98–113

    • attainment, 101–4, 135

    • drop-out rates, 104, 105, 106

    • governance issues, 131

    • poverty reduction, 91

    • public spending on, xii, xiii, 97–8, 105–10, 134, 135

    • quality and quantity of inputs, 99, 104–5

    • repeater rates, 104–5, 106

    • returns to investment, 98–101

    • student-teacher ratios, 112, 113

    • teacher quality/wages, 99, 110–13, 135

    efficiency

    • public spending, 134, 135

    • tax, 42, 43, 55, 57

    Egypt, dollarization, 194, 198

    El Salvador

    • dollarization, 38nl6, 169, 174, 179, 195

    • education: attainment, 101, 103; drop-out and repetition rates, 106; government spending on, 105, 107, 109; returns to investment, 100; teacher quality, 112, 113; teachers’ second jobs, 137n20

    • emerging market status, 2

    • Eurobonds, 37n2

    • exchange rate regime, 169, 172, 177, 183, 191n3

    • financial openness, 160

    • fiscal impulse and capacity utilization, 25

    • foreign exchange deposits, 195

    • governance indicators, 133

    • gross national income, 89

    • health: government spending on, 119; system, 118, 122; trends in health status, 115, 117

    • poverty and inequality, 89, 90, 91

    • precautionary fund, 163

      • public debt: external, 13;

      • fiscal sector developments, 22;

      • GDP-debt ratio, 5, 6, 8;

      • interest rates on, 19;

      • key macroeconomic indicators, 10; primary balance and gross financing requirement, 20, 26 revenue and expenditure elasticities, 24; vulnerability to shocks, 19, 35

    • public expenditure, 94–5, 96

    • social safety nets, 124, 127, 130

    • taxation: capital gains tax, 75, 76; enterprise income tax, 62–3, 66, 67; excise taxes, 59–61; on interest, 75; low revenues, 21; net worth or assets tax, 77, 80; personal income tax, 68–9, 72–3; tax structure, 45–6, 49–50; value-added tax, 51–6, 57; withholding taxes on foreign remittances, 78

    • trade: estimated fiscal effect of FTA with United States, 164; exports, 143, 144, 146; foreign investment flows, 153, 154; and growth, 153, 155 imports, 145, 147; indicators, 143, 144; NAFTA, 152; nontariff measures, 151; tariffs, 148, 149, 150, 158

    • US remittances, 159, 160

    employment programmes, 124, 126–9

    enterprise (corporate) income tax, 48, 58, 62–7, 71, 74–5, 77, 84

    equity

    • education impact on, 97

    • taxation, 41, 42, 43, 74, 83

    • see also inequality

    Espinosa Ferrando, Jaime, 114

    European Union (EU)

    • fiscal rules, 30

    • subsidies, 158

    • tax harmonization, 42, 83

    exchange rate, xiii, 169–93

    • active monetary policy, 202–3

    • dollarization, 162–3, 196–7, 199, 200, 201, 203–4

    • econometric approach, 180–2, 186

    • flexible, 170, 171, 174, 179, 182, 184

    • floating, 169, 173, 174, 176–7, 190, 191n7, 203

    • index approach, 182–5, 190–1

    • pegged, 170, 171, 179, 189: crawling peg, 169, 170, 172, 182, 186; dollarization, 162, 163, 197; fixed peg, 169, 172, 174, 176–7, 189; suitability for, 182, 184, 190–1

    • public debt, 4, 19–20, 36

    • purchasing power parity, 136n3

    • theoretical considerations, 170–1

    • trade liberalization, xiii

    • volatility, 196–7, 200, 204

    • see also currency; depreciation

    excise taxes, 43, 48, 58, 59–61, 83, 84

    exports, 143–5, 146, 165

    • adverse shocks, 19

    • agricultural, 156–9

    • competitiveness, xiii

    • diversification, 19, 143, 155, 174

    • exchange rate regimes, 171, 174

    • foreign direct investment, 152–3

    • GDP ratio, 38nl2

    • taxes on, 43, 51

    • see also trade

    FDI see foreign direct investment

    financial crises, 16–18, 21

    • Asian, 18, 125

    • contagion, 2

    • social safety nets, 121

    • see also shocks

    fiscal balance, 3–4, 19, 20, 26, 36

    fiscal policy

    • adverse shocks, 26, 27–30

    • countercyclical, 35, 164, 165

    • dollarization, 163–4, 165

    • exchange rate regimes, 170

    • fiscal rules, 30–4

    • government consumption, 96

    • limited flexibility, 21–6, 34

    • procyclical, 21–6, 164

    • public debt, xii, xiii, 1–40

    • see also monetary policy

    Fischer, S., 1

    flexibility

    • exchange rate, 174, 175, 180, 182, 189

    • fiscal rules, 31

    • limited policy flexibility, 21–6, 34

    • tax harmonization, 83

    food transfers, 124–5, 126–9

    foreign direct investment (FDI), 152–3, 154, 160, 165, 167n9

    foreign exchange reserves, 34–5, 201

    free trade, xii, xiii, 157

    free trade zones, 65

    Funkhouser, E., 159

    Gavin, M., 21

    GDP see Gross Domestic Product

    gender inequalities, 101–4

    globalization, 84

    GNI see gross national income

    governance, 88, 125, 131–4, 135, 136

    government effectiveness, 132, 133

    government spending see public expenditure

    Grenada, exchange rate regime, 172, 177

    Gresham’s Law, 198

    Gross Domestic Product (GDP)

    • contingent liabilities, 21

    • debt ratio, 2, 5–9, 12–16, 18, 93: accounting framework, 4, 36; adverse shocks, 26, 29–30, 34; export-to-GDP ratio relationship, 38nl2; fiscal rules, 31–2, 34; interest service, 38n9

    • education spending, 105

    • exchange rate regimes, 171, 174, 176–9, 180–1, 182, 190

    • export trade, 144–5

    • health spending, 119

    • mismeasurement, 85n3

    • nominal, 31–2, 174, 176–9, 181

    • public expenditure, 93

    • tax exemption levels, 71, 72–3

    • tax revenue ratio, 21, 44, 51, 65–7

    gross national income (GNI), 88

    growth

    • adverse shocks and fiscal: adjustment, 27, 28, 29, 30, 32–3; education influence on, 97, 98

    • elasticities, 92

    • health improvement influence on, 97

    • human capital improvement, 135, 136

    • macroeconomic stability, 41

    • poverty and inequality, 88–93

    • public debt, 12–16, 35

    • tax policy, 42

    • trade policies, 153–5

    Guatemala

    • dollarization, 195

    • education: attainment, 101, 103; drop-out and repetition rates, 106; gender inequality, 104; government spending on, 105, 107, 108, 109; returns to investment, 100

    • student-teacher ratios, 113

    • teacher quality, 112, 113

    • teachers’ second jobs, 138n20

    emerging market status, 2

    Eurobonds, 37n2

    exchange rate regime, 171, 173, 175, 178, 183

    financial openness, 160

    fiscal impulse and capacity utilization, 25

    foreign currency, 162

    foreign exchange deposits, 195

    governance indicators, 132, 133, 134

    gross national income, 89

    health: government spending on, 119; system, 121, 122; trends in health status, 115, 116, 117

    IMF emergency assistance, 90

    poverty and inequality, 89, 90

    public debt: external, 13; fiscal sector developments, 22–3; GDP-debt ratio, 5, 6–7, 9, 93; interest rates on, 19; key macroeconomic indicators, 10–11; primary balance and gross financing requirement, 20, 26; revenue and expenditure elasticities, 24

    public expenditure, 94–5, 96

    response to US growth rate, 161

    social safety nets, 125, 127–8

    taxation: capital gains tax, 75, 76; enforcement, 82; enterprise income tax, 62–3, 65, 66, 67; excise taxes, 59–61; on interest, 75; net worth or assets tax, 77, 80; personal income tax, 67, 68–9, 72–3; revenue, 21, 44; tax structure, 45–6, 49–50; value-added tax, 51–6; withholding taxes on foreign remittances, 78

    trade: estimated fiscal effect of FTA with United States, 164; exports, 144–5, 146; foreign investment flows, 154; imports, 147; indicators, 143, 144; NAFTA, 151, 152; nontariff measures, 151; tariffs, 148, 149, 150, 158

    • US remittances, 159, 160

    • wage bill, 137nl6

    Gupta, Sanjeev, 108, 111, 119–20

    Guyana

    • exchange rate regime, 171, 173, 175, 178, 182, 183, 184

    • health system, 117

    • low AGSIZE value, 191n9

    Haiti

    • exchange rate regime, 171, 173, 174, 175, 178, 183

    • exports, 191n4

    • health system, 117

    • US remittances, 160

    Hanushek, Eric A., 98, 111

    Harbison, Ralph W., 111

    harmonization, tax, 41, 42, 83–4

    Hausmann, R., 21

    health, 113–21

    • governance issues, 131

    • organization of health systems, 117–18

    • poverty reduction, 91

    • public spending on, xii, xiii, 97–8, 118–21, 123, 134, 135

    • quality indicators, 121, 122

    • returns to investment, 114

    • trends in health status, 114–17, 135

    Heavily Indebted Poor Countries (HIPCs), 12

    Hernández Alvarez, C., 114

    HIPCs see Heavily Indebted Poor Countries

    Hoekman, B., 157

    Holden, P., 189, 191n5

    Honduras

    • dollarization, 162

    • education: attainment, 101, 103; drop-out and repetition rates, 106; government spending on, 107, 108, 109, 110; student-teacher ratios, 113; teacher quality, 99, 110–11, 112, 113

    • exchange rate regime, 169, 171, 172, 175, 177, 182, 183

    • fiscal impulse and capacity utilization, 25

    • foreign exchange deposits, 195

    • governance indicators, 132, 133

    • gross national income, 88, 89

    • health: government spending on, 119, 121, 123; system, 121, 122; trends in health status, 115, 116, 117

    • poverty and inequality, 89, 90, 91, 92–3

    • Poverty Reduction Strategy Paper, 97, 98, 130, 137nl8

    • public debt: external, 13–14; fiscal sector developments, 23; GDP-debt ratio, 2, 5, 7, 9, 38n8, nl8, 93; interest rates on, 19; key macroeconomic indicators, 11; primary balance and gross financing requirement, 20, 26, 39n25; revenue and expenditure elasticities, 24

    • public expenditure, 94–5, 96

    • Report on the Observance of Standards and Codes, 131

    • response to US growth rate, 161

    • social safety nets, 124, 128, 130

    • taxation: capital gains tax, 75, 76; enterprise income tax, 58, 62–3, 65, 66; excise taxes, 59–61; on interest, 75; net worth or assets tax, 77, 80; personal income tax, 68–9, 72–3; tax structure, 45–6, 49–50; value-added tax, 51–6; withholding taxes on foreign remittances, 78

    • trade: estimated fiscal effect of FTA with United States, 164; exports, 144–5, 146; foreign investment flows, 154; and growth, 153, 155; imports, 147; indicators, 143, 144; NAFTA, 151, 152; nontariff measures, 151; tariffs, 148, 149, 150, 158

    • US remittances, 159, 160

    Honohan, Patrick, 205n3

    human capital, 114, 135, 136

    • investment in, 97–8

    • social safety nets, 124, 126–9, 130

    Hungary, dollarization, 195, 198

    Hurricane Mitch, 93, 130

    hysteresis, 197

    IDA see International Development Association

    IFIs see International Financial Institutions

    IMF see International Monetary Fund

    immunization, 121, 122

    imports, xiii, 145, 147

    • NAFTA, 156

    • protection, 152

    • sensitive commodities, 157

    • taxes on, 51

    • see also tariffs; trade

    income

    • economic development, 88

    • gross national income, 88

    • health relationship, 114

    • inequality, 90–1

    • World Bank classification, 136n4

    income tax, 43, 48, 51, 58–82

    • capital gains, 74, 75, 76

    • enforcement, 82, 83

    • enterprise (corporate), 48, 58, 62–7, 71, 74–5, 77, 84

    • harmonization, 83–4

    • on interest and dividends, 74–5, 77

    • joint filing, 75–7

    • net worth or assets, 77, 80–1

    • personal, 48, 67–73, 74, 84–5

    • withholding taxes on foreign remittances, 77, 78

    Indonesia

    • borrowing rule, 30

    • fiscal crisis, 16, 17, 21

    inequality, 87, 88–93, 134–5

    • education, 99, 101–4

    • gender, 101–4

    • measuring, 137n9

    • social safety nets, 124, 125

    • see also equity

    infant mortality, 114, 116, 117, 120–1

    inflation: dollarization, 196–7, 203; exchange rate regimes, 170, 174, 176–9, 180–1, 182, 184; income tax, 77; targeting, 198, 202, 204

    infrastructure

    • health, 116, 117

    • public debt accounting, 3

    • social safety nets, 124, 125, 126–9

    institutional quality, 88

    Inter-American Development Bank, xii, 118, 134

    interest income tax, 74–5, 77

    interest rates

    • adverse shocks and fiscal adjustment, 19, 27–9, 30, 32–3, 34, 39n22

    • El Salvador, 38nl6

    • exchange rate regimes, 174, 175

    • local currency management, 203

    • public debt, 4, 18, 35, 36, 39n22

    interest service, 2, 4, 5, 29, 35, 38n9

    International Development Association (IDA), 90

    International Financial Institutions (IFIs), 90

    International Monetary Fund (IMF)

    • Code of Fiscal Transparency, 131

    • external debt, 16

    • financial openness, 160

    • Latin American procyclical fiscal policies, 21

    • Poverty Reduction Growth Facility, 90

    • Western Hemisphere Department, xii

    investment

    • education, 97, 98–101

    • health, 97, 98, 114

    • human capital, 97–8

    • public, 3, 96–7

    • tax incentives, 65

    • trade, 152–3, 154, 156

    • see also foreign direct investment

    investor sentiment, 18, 19

    Israel

    • dollarization, 195, 198

    • exchange rate regime, 175

    Ize, Alain, 194–206

    Jamaica

    • exchange rate regime, 171, 173, 175, 178, 183

    • tariffs, 149, 150

    • US remittances, 160

    • value-added tax, 55

    Japan

    • deficit rule, 30

    • exchange rate regime, 175

    • subsidies, 158

    joint filing, 75–7

    Juhn, G., 170, 182, 186

    Kain, J. F., 111

    Kaufmann, Daniel, 125

    Kim, D., 98

    Korea, fiscal crisis, 16, 17, 21

    Krueger, A., 98, 99

    labour market flexibility, 35, 159

    Lederman, Daniel, 142–68

    legal system, 44

    Levy Yeyati, Eduardo, 191n5, 205n3

    liabilities

    • contingent, 4–5, 12, 16, 20–1, 28, 29, 33

    • debt stock operations, 4–5, 12, 20–1

    liability dollarization, 162–3

    Liang, Xiaoyan, 111

    liberalization

    • dollarization, 195, 198

    • financial intermediation, 203

    • trade, xiii, 35, 51, 142, 152, 153, 165

    liquidity risk, 198–9, 201–2

    Lithuania, dollarization, 205n9

    Lora, E., 153

    Maloney, W., 155

    market confidence, 19

    market imperfections, 42, 43, 119

    Marshall, J. H., 99, 110–11

    maturities, 35

    Mauro, P., 170, 182, 186

    Mercer-Blackman, Valerie, 169–93

    México

    • capital gains, 76

    • dollarization, 195, 196, 198

    • education spending, 108

    • enterprise income tax, 62, 66

    • external debt, 15

    • fiscal crisis, 16, 17, 18, 21, 199

    • GDP-debt ratio, 12, 38nl4

    • NAFTA, 151, 152, 156–7

    • net worth or assets tax, 80

    • nontariff measures, 151

    • personal income tax, 68, 72

    • returns to education, 100

    • tariffs, 149, 150

    • tax structure, 45–6, 49–50

    • trade, 145

    • US remittances, 160

    • value-added tax, 52, 56

    • withholding taxes on foreign remittances, 78

    migration, 159

    monetary integration, xiii, 142–3, 159–61, 162–4

    monetary policy

    • countercyclical, 197, 202

    • dollarization, 196, 197, 199, 200, 203, 204–5

    • exchange rate regimes, 169–93, 204

    • vulnerability to shocks, 34–5

    • see also fiscal policy

    money creation, 37n5

    Monge-Naranjo, A., 153

    moral hazard, 119, 197, 200, 201, 204

    multinational corporations, 82, 84

    Mussa, M., 170

    NAFTA see North American Free Trade Agreement

    natural disasters, 2, 19, 125

    • see also Hurricane Mitch

    Netherlands, deficit rule, 30

    New Zealand

    • deficit rule, 30

    • exchange rate regime, 175

    Nicaragua

    • dollarization, 162, 195

    • education: attainment, 101, 103–4; drop-out and repetition rates, 106; government spending on, 105, 107, 108, 109, 110; returns to investment, 100; teacher quality, 111, 112, 113

    • exchange rate regime, 169, 171, 172, 175, 177, 182, 183

    • fiscal impulse and capacity utilization, 25

    foreign exchange deposits, 195

    governance indicators, 133, 134

    gross national income, 88, 89

    health: government spending on, 119, 121, 123; system, 118, 121, 122; trends in health status, 114, 115, 116, 117

    poverty and inequality, 89, 90, 91

    Poverty Reduction Strategy Paper, 97–8, 130–1, 137nl8

    public debt

    • external, 14

    • fiscal sector developments, 23

    • GDP-debt ratio, 2, 5, 7, 9, 12, 38n8, n18, 93

    • key macroeconomic indicators, 11

    • primary balance and gross: financing requirement, 20, 26, 39n25; revenue and expenditure elasticities, 24

    public expenditure, 94–5, 96

    Report on the Observance of Standards and Codes, 131

    social safety nets, 124, 128–9, 130–1

    taxation: capital gains tax, 75, 76; enterprise income tax, 62–3, 65, 66; excise taxes, 59–61; exemption levels, 71; on interest, 75; net worth or assets tax, 77, 80; personal income tax, 68–9, 71, 72–3; revenue, 21, 44; tax structure, 45–6, 49–50; value-added tax, 51–6, 57; withholding taxes on foreign remittances, 78

    trade: estimated fiscal effect of FTA with United States, 164; exports, 144–5, 146; foreign investment flows, 153, 154; and growth, 153, 155; imports, 147; indicators, 143, 144; NAFTA, 151, 152; nontariff measures, 151; tariffs, 148, 149, 150, 158

    • US remittances, 159, 160

    • wage bill, 137n16

    nontariff barriers, 148, 151

    North American Free Trade Agreement (NAFTA), 142, 148, 151–3, 156, 166n4

    OCA see Optimum Currency Area

    OECD see Organization for Economic Cooperation and Development

    Offerdal, Erik, 1–40, 169–93

    Optimum Currency Area (OCA), 142–3, 159, 163

    Organization for Economic Cooperation and Development (OECD)

    • education, 99, 100

    • enterprise income tax, 65

    Panamá

    • dollarization, 162, 169, 171–4, 179, 195

    • education: attainment, 101, 104; drop-out and repetition rates, 106; government spending on, 107, 109, 110; returns to investment, 100; student-teacher ratios, 113; teacher quality, 112, 113

    • emerging market status, 2

    • exchange rate regime, 169, 172, 177, 183, 184

    • fiscal impulse and capacity utilization, 25

    • foreign exchange reserves, 34

    • governance indicators, 133, 134

    • gross national income, 88, 89

    • health: government spending on, 119; system, 118, 122; trends in health status, 115, 116

    • poverty and inequality, 89, 91

    • public debt: debt rule, 30; external, 14; fiscal sector developments, 23; GDP-debt ratio, 2, 5, 7, 9; key macroeconomic indicators, 11; primary balance and gross financing requirement, 20, 26; revenue and expenditure elasticities, 24; vulnerability to shocks, 19

    • public expenditure, 94–5, 96

    • social safety nets, 124, 129

    • taxation: capital gains tax, 75, 76; enterprise income tax, 62–3, 65, 66, 67; excise taxes, 59–61; on interest, 75; net worth or assets tax, 77, 80; personal income tax, 67, 68–9, 72–3; revenue, 21, 44; tax structure, 45–6, 49–50; value-added tax, 51–6; withholding taxes on foreign remittances, 78

    • trade: exports, 144, 146; foreign investment flows, 153, 154; and growth, 153, 155; imports, 145, 147; indicators, 143, 144

    Panizza, U., 153

    Paraguay

    • capital gains, 76

    • enterprise income tax, 62, 66

    • health system, 117

    • net worth or assets tax, 81

    • personal income tax, 68, 72

    • tariffs, 149, 150

    • tax structure, 45–6, 49–50

    • US remittances, 160

    • value-added tax, 52, 56

    • withholding taxes on foreign remittances, 78

    Pattillo, C., 12

    Perry, Guillermo, 142–68

    personal income tax, 48, 67–73, 74, 84–5

    Peru

    • capital gains, 76

    • dollarization, 198, 205n8

    • enterprise income tax, 62, 66

    • external debt, 15

    • net worth or assets tax, 81

    • personal income tax, 68, 72

    • returns to education, 100

    • tariffs, 149, 150

    • tax structure, 45–6, 49–50

    • US remittances, 160

    • value-added tax, 52, 56

    • withholding taxes on foreign remittances, 78

    Philippines, fiscal crisis, 16, 17

    Poirson, H., 170, 189, 191n6

    Poland, dollarization, 195, 198

    policy flexibility, 21–6

    political stability, 132, 133, 134, 136, 171, 191n7

    poverty, 87, 88–93, 134–5

    • health spending, 119–21, 135

    • human capital influence on, 97

    • measuring, 136n7

    • rural, 158–9

    • social safety nets, 121–5, 126–9, 130–1

    Poverty Reduction Growth Facility (PRGF), 90, 96

    Poverty Reduction Strategy Paper (PRSP), 90, 96, 97–8, 130, 136n6, 137nl8

    PPP see purchasing power parity

    PRGF see Poverty Reduction Growth Facility

    price-indexed financial instruments, 203

    prices, dollarization, 196, 197, 199

    privatization receipts, 3, 4

    productivity

    • education impact on, 97

    • enterprise income tax, 65–7

    • health impact on, 97, 114

    • value-added tax, 55–7

    property taxes, 42, 51, 77–82, 85

    PRSP see Poverty Reduction Strategy Paper

    public debt see debt

    public expenditure, xii, xiii, 87–141

    • education, xii, xiii, 97, 98–113, 135

    • and governance, 125, 131–4, 136

    • health, xii, xiii, 97, 98, 113–21, 123, 135

    • level and composition of, 93–7

    • social safety nets, xii, 121–5, 126–9, 130–1

    • see also debt

    public insurance, 123

    purchasing power parity (PPP), 88, 136n3, 137nl9, 138n22

    regulation

    • dollarization risks, 200–1

    • regulatory quality, 132, 133, 136

    Reinhardt, C., 180

    Rennhack, Robert, 169–93

    Report on the Observance of Standards and Codes (ROSC), 131

    risk

    • credit, 199, 200

    • liquidity, 198–9, 201–2

    • local currency, 199, 202

    Rivkin, S. G., 111

    Rogoff, K., 180

    ROSC see Report on the Observance of Standards and Codes

    rule of law, 84, 132, 133, 136

    rural areas

    • agricultural trade, 157, 158–9

    • health status, 117

    • social safety nets, 125

    Russia, fiscal crisis, 17

    St. Kitts and Nevis, exchange rate regime, 172, 177

    St. Lucia, exchange rate regime, 172, 177

    St. Vincent and the Grenadines, exchange rate regime, 172, 177

    securities, 203

    seigniorage, 37n5, 162, 164

    self-employment, 83

    self-insurance, 123

    shocks

    • dollarization, 202, 204, 205n2

    • and fiscal adjustment, 26–30, 32–4

    • fiscal rules, 30–4

    • monetary integration, 160–1

    • public debt, 1, 26–30

    • social safety nets, 121–5

    • vulnerability to, 1, 2, 19–20, 34–5, 39n22

    • see also depreciation; financial crises

    Slovenia, dollarization, 195, 205n9

    social insurance, 123, 124

    social safety nets, xii, 121–5, 126–9, 130–1, 134–5

    social security taxes, 51

    spending see public expenditure

    stock adjustment, 27, 28, 29, 30, 32–3

    stock operations, 4–5, 12, 20–1, 32–4

    Stotsky, Janet G., 41–86

    Sturzenegger, Federico, 191n5

    subsidies, 96, 124, 157–8

    Suescún, Rodrigo, 142–68

    supervision, dollarization, xiii, 163, 165

    Suriname, health system, 117

    sustainability of public debt, 2–3, 37n6

    tariffs, xiii, 83, 148–51, 154, 157

    tax incentives, 43, 65, 83–4, 153

    tax policy, xii-xiii, 41–86

    • administrative issues, 42, 43, 82–3, 84, 85

    • distortionary taxation, 96

    • double taxation, 74

    • enforcement, 82–3

    • excises, 43, 48, 58, 59–61, 83, 84

    • exemptions, 57, 65, 71, 72–3, 85n8, 153

    • general principles of tax reform, 42–4

    • harmonization, 41, 42, 83–4

    • income tax, 43, 48, 51, 58–82: capital gains, 74, 75, 76; enforcement, 82, 83; enterprise (corporate), 48, 58, 62–7, 71, 74–5, 77, 84; harmonization, 83–4; on interest and dividends, 74–5, 77; joint filing, 75–7;net worth or assets, 77, 80–1; personal, 48, 67–73, 74, 84–5; withholding taxes on foreign remittances, 77, 78

    • limited flexibility, 21

    • property taxes, 42, 51, 77–82, 85

    • structural reforms, 35

    • structure of Central American tax systems, 44–51

    • trade, 48–51, 84, 164

    • value-added tax, 41, 43, 48, 51–8, 74, 82, 83

    teachers: quality of, 99, 110–13; wages. 111, 112, 113, 135

    terms of trade: adverse shocks, 19, 29; exchange rate regime, 171; variability in, 174, 176–8, 179, 180, 181

    • vulnerability to changes in, 19

    Thailand, fiscal crisis, 16, 17, 21

    trade, 142–68

    • agricultural, 156–9, 165

    • barriers to, 35, 148

    • globalization, 84

    • impact of NAFTA, 151–3

    • integration with United States, 155–61

    • liberalization, xiii, 35, 51, 142, 152, 153, 165

    • nontariff barriers, 148, 151

    • openness to, 174, 176–8, 179, 180, 181

    • policy reforms and economic growth, 153–5

    • structure, 143–7

    • tariffs, xiii, 83, 148–51, 154, 157

    • taxes, 48–51, 84, 164

      • see also exports; imports; terms of trade

    transfer pricing, 82, 84

    transparency

    • fiscal rules, 31

    • governance issues, 131–2, 135, 136

    • risk management in banking, 201

    • social safety nets, 124

    • tax system, 42, 43–4

    • see also accountability

    Trinidad and Tobago

    • exchange rate regime, 171, 172, 175, 177, 183, 184, 191n2

    • tariffs, 149, 150

    • value-added tax, 55

    Turkey, fiscal crisis, 17

    United Kingdom, exchange rate regime, 175

    United States

    • exchange rate regime, 175

    • Farm Bill, 157–9, 166n7

    • monetary integration with Central America, xiii, 159–61, 162, 163

    • returns to investment in education, 98–9

    • teacher quality, 110

    • trade with Central America, xiii, 142–7, 151–2, 155–9, 164–5, 172–3

    • see also dollarization

    Uruguay

    • capital gains, 76

    • enterprise income tax, 62, 66

    • health system, 117

    • net worth or assets tax, 81

    • personal income tax, 68, 72

    • returns to education, 100

    • tariffs, 149, 150

    • tax structure, 45–6, 49–50

    • value-added tax, 52, 56

    • withholding taxes on foreign remittances, 78

    value-added tax (VAT), 41, 43, 48, 51–8, 74, 82, 83

    van Wijnbergen, S., 36

    VAT see value-added tax

    Venezuela

    • capital gains, 76

    • enterprise income tax, 62, 66

    • net worth or assets tax, 81

    • personal income tax, 68, 72

    • tariffs, 149, 150

    • tax structure, 45–6, 49–50

    • US remittances, 160

    • value-added tax, 52, 56

    • withholding taxes on foreign remittances, 78

    wages

    • dollarization, 196, 197, 198, 199

    • public spending on, 93–6, 137nl6

    • teachers, 111, 112, 113, 135

    Wang, Limin, 117

    WHO see World Health Organization

    WoldeMariam, Asegedech, 41–86

    women, health status, 114, 121

    World Bank, xii

    • governance indicators, 132

    • gross national income, 88

    • income classification, 136n4

    • International Development Association, 90

    World Development Indicators, 137nl9, 138n22

    World Health Organization (WHO), 138n22

    World Trade Organization (WTO)

    • Doha Round, xiii, 142, 158

    • tax rules, 65

    Yogo, M., 99

    Yuñez-Naude, A, 156

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