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Western Hemisphere > Argentina

You are looking at 1 - 5 of 5 items for :

  • Type: Journal Issue x
  • National Budget, Deficit, and Debt: General x
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Cover IMF Working Papers
Public Debt Dynamics During the Climate Transition
Daniel Garcia-Macia
,
Waikei R Lam
, and
Anh D. M. Nguyen
Managing the climate transition presents policymakers with a tradeoff between achieving climate goals, fiscal sustainability, and political feasibility, which calls for a fiscal balancing act with the right mix of policies. This paper develops a tractable dynamic general equilibrium model to quantify the fiscal impacts of various climate policy packages aimed at reaching net zero emissions by mid-century. Our simulations show that relying primarily on spending measures to deliver on climate ambitions will be costly, possibly raising debt by 45-50 percent of GDP by 2050. However, a balanced mix of carbon-pricing and spending-based policies can deliver on net zero with a much smaller fiscal cost, limiting the increase in public debt to 10-15 percent of GDP by 2050. Carbon pricing is central not only as an effective tool for emissions reduction but also as a revenue source. Delaying carbon pricing action could increase costs, especially if less effective measures are scaled up to meet climate targets. Technology spillovers can reduce the costs but bottlenecks in green investment could unwind the gains and slow the transition.
Keywords:
Climate change; mitigation; public debt; carbon pricing; subsidies; public investment; industrial policies; dynamic general equilibrium.; technology spillover; investment bottleneck; No. 2024/71; mix of carbon-pricing; adjustment cost parameter; Emerging and frontier financial markets; Climate finance; Climate policy; Global
Cover IMF Working Papers
Economic Activity, Fiscal Space and Types of COVID-19 Containment Measures
Amr Hosny
and
Kevin Pallara
This paper argues that the type of COVID-19 containment measures affects the trade-offs between infection cases, economic activity and sovereign risk. Using local projection methods and a year and a half of high-frequency daily data covering 44 advanced and emerging economies, we find that smart (e.g. testing) as opposed to physical (e.g. lockdown) measures appear to be best placed to tackle these trade-offs. Initial conditions also matter whereby containment measures can be less disruptive when public health response time is fast and public debt is low. We also construct a database of daily fiscal announcements for Euro area countries, and find that sovereign risk is improved under a combination of large support packages and smart measures.
Keywords:
COVID-19; fiscal measures; containment measures; fiscal space; sovereign risk.; containment measure; IMF working papers; public health response time; types of COVID-19 containment; CDS spread; infection case; Fiscal space; Credit default swap; COVID-19; Western Hemisphere; Global; Europe
Cover IMF Working Papers
Public Debt Dynamics and Intra-Year Exchange Rate Fluctuations
Mr. Santiago Acosta Ormaechea
The public sector, in carrying out its operations, often incurs foreign currency denominated liabilities and, as such, is exposed to exchange rate fluctuations that could affect the value of public debt to GDP ratios over time. This paper shows that converting foreign currency denominated flows and stocks into local currency using the average and the end-of-period exchange rates, respectively, as envisaged in public finance manuals, gives rise to an identifiable stock-flow adjustment term—due to intra-year exchange rate fluctuations—that affects public debt accumulation. Importantly, the inclusion of this often-ignored stock-flow adjustment term is critical to accurately project public debt levels and any related indicator that could in turn inform about the risk of debt distress. Using a novel dataset covering 82 countries during 2008–19, the paper shows that this stock flow adjustment term is sizable in countries experiencing large exchange rate depreciations, namely above the 99th percentile of the full sample, reaching 1.2 percent of GDP. Interestingly, the measurement of policy-related concepts such as interest rate-growth differentials and debt stabilizing primary balances are also affected by intra-year exchange rate fluctuations, and in non-negligible ways.
Keywords:
Public debt dynamics; intra-year exchange rate fluctuations; interest rate-growth differential; debt stabilizing primary balance.; WP; year exchange rate fluctuation; debt projection; accumulation equation; end-of-period exchange rates; heightened exchange rate volatility; nominal exchange rate depreciation; debt stabilizing primary balance; Exchange rates; Fiscal stance; Currencies; Asset valuation; Global
Cover IMF Working Papers
The Fiscal Costs of Contingent Liabilities: A New Dataset
Ms. Elva Bova
,
Marta Ruiz-Arranz
,
Mr. Frederik G Toscani
, and
H. Elif Ture
We construct the first comprehensive dataset of contingent liability realizations in advanced and emerging markets for the period 1990–2014. We find that contingent liability realizations are a major source of fiscal distress. The average fiscal cost of a contingent liability realization is 6 percent of GDP but costs can be as high as 40 percent for major financial sector bailouts. Contingent liability realizations are correlated among each other and tend to occur during periods of growth reversals and crises, accentuating pressure on the budget during already difficult times. Countries with stronger institutions are able to better control and address the underlying risks so that they are less exposed to contingent liability realizations.
Keywords:
WP; CL realization; CL; Contingent Liabilities; Public Debt; Budget Deficits; Fiscal Crisis; fiscal cost; CL materialization; debt assumption; SOE support; CL shock; Financial sector; Fiscal risks; Global financial crisis of 2008-2009; Global; Eastern Europe
Cover IMF Working Papers
Fiscal Limits, External Debt, and Fiscal Policy in Developing Countries
Huixin Bi
,
Ms. Wenyi Shen
, and
Ms. Susan S. Yang
This paper studies fiscal policy effects in developing countries with external debt and sovereign default risks. State-dependent distributions of fiscal limits are simulated based on macroeconomic uncertainty and fiscal policy specifications. The analysis shows that expected future revenue plays an important role in the low fiscal limits of developing countries, relative to those of developed countries. External debt carries additional risks since large devaluation of the real exchange rate can suddenly raise default probabilities. Consistent with majority views, fiscal consolidations are counterproductive in the short and medium runs. When an economy approaches its fiscal limits, government spending can be less expansionary than in a low-debt state. As more revenue is required to service debt in a high-debt state, higher tax rates raise the economic cost of increasing consumption, reducing the fiscal multiplier.
Keywords:
WP; government spending; risk premium; terms of trade; fiscal limits; fiscal policy; sovereign default risk; external debt; developing countries; state-dependent fiscal multiplier; debt state; government spending effect; government spending multiplier; exchange rate; government spending share; debt distribution; fiscal policy effect; government spending shock; Government consumption; Fiscal consolidation; Eastern Europe