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The Role of Fiscal Policy in Sustainable Stabilization: Evidence From Latin America
Author: Mr. Gerd Schwartz and Mrs. Teresa Ter-Minassian
Series:
IMF Working Papers
Volume/Issue:
Volume 1997: Issue 094
Language:
English
Publication Date:
01 Aug 1997
DOI:
https://doi.org/10.5089/9781451950786.001
ISBN:
9781451950786
ISSN:
1018-5941
Pages:
33
Keywords:
WP; country; government; reform; revenue; Fiscal policy; Stabilization; Latin America; Latin American country; expenditure reform; foreign currency; nominal exchange rate; expenditure management systems; Tanzi effect; allocation problem; Inflation; Fiscal consolidation; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper reviews the role of fiscal policy in a number of stabilization programs in Latin America since the early 1980s. The paper highlights the importance of sustainable fiscal adjustment in stabilization efforts, and discusses the main issues that arise in this context. By reviewing the Latin American experience, it is argued that responsibility for failed stabilization attempts can be traced to four main factors: inconsistent policy mixes; excessive reliance on temporary factors of improvement in the fiscal accounts; failure to implement fundamental fiscal reforms; and lack of complementary structural reforms.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund