Public Spending Policies in Latin America and the Caribbean
In low- and middle-income economies, public spending policies diverge significantly from those of industrialized nations due to structural differences. Low- and middle-income economies often make long-term commitments based on short-term economic conditions, leading to mismatches between spending ma...
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| Main Authors: | , |
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| Format: | Online |
| Language: | en_US |
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Washington, DC: World Bank
2024
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| Subjects: | |
| Online Access: | https://hdl.handle.net/10986/42022 https://doi.org/10.1596/978-1-4648-2069-4 |
| _version_ | 1866367761232429056 |
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| author | Riera-Crichton, Daniel Vuletin, Guillermo |
| author_facet | Riera-Crichton, Daniel Vuletin, Guillermo |
| author_sort | Riera-Crichton, Daniel |
| collection | Colección Libros - Series (activas) |
| description | In low- and middle-income economies, public spending policies diverge significantly from those of industrialized nations due to structural differences. Low- and middle-income economies often make long-term commitments based on short-term economic conditions, leading to mismatches between spending maturity and economic cycles. These mismatches can exacerbate fiscal imbalances and hinder economic growth by forcing compositional changes in public spending.
"Public Spending Policies in Latin America and the Caribbean: When Cyclicality Meets Rigidities" describes significant cyclical behavior variations in low- and middle-income markets. Contrary to Keynesian principles, public spending in these economies tends to be procyclical during economic booms, driven by increased borrowing and political pressures to address social deficits, but policy makers are unable or unwilling to retrench during economic busts. This approach not only amplifies macroeconomic volatility but also plants the seeds for fiscal distress, which is typically addressed by diminishing the quantity and quality of public investment—with serious consequences for long-term growth. Labor market informality further complicates matters, rendering automatic stabilizers like unemployment insurance impractical. Instead, governments rely on public employment and social transfer programs, which are downwardly rigid and can contribute to the expansion of government size over time.
Addressing these anomalies requires policy interventions beyond traditional recommendations. Implementing fiscal rules to restrain overspending during economic upturns, enhancing the efficiency of public goods provision, and establishing mechanisms to adjust social programs during economic fluctuations are suggested approaches. In addition, measures to protect public investment and mitigate biases against pension benefits could aid in fostering long-term economic sustainability and welfare improvement. Public Spending Policies in Latin America and the Caribbean will be of interest to policy makers, researchers, and anyone with an interest in developing mechanisms for helping low- and middle-income economies weather economic storms. |
| format | Online Book |
| id | wb-10986-42022 |
| institution | Banco Mundial |
| language | en_US |
| publishDate | 2024 |
| publisher | Washington, DC: World Bank |
| record_format | dspace |
| spelling | wb-10986-420222025-04-15T12:10:22Z Public Spending Policies in Latin America and the Caribbean When Cyclicality Meets Rigidities Riera-Crichton, Daniel Vuletin, Guillermo CYCLICALITY PUBLIC SPENDING FISCAL IMBALANCES POLICY INTERVENTIONS SUSTAINABILITY POLITICAL PRESSURES LABOR MARKET In low- and middle-income economies, public spending policies diverge significantly from those of industrialized nations due to structural differences. Low- and middle-income economies often make long-term commitments based on short-term economic conditions, leading to mismatches between spending maturity and economic cycles. These mismatches can exacerbate fiscal imbalances and hinder economic growth by forcing compositional changes in public spending. "Public Spending Policies in Latin America and the Caribbean: When Cyclicality Meets Rigidities" describes significant cyclical behavior variations in low- and middle-income markets. Contrary to Keynesian principles, public spending in these economies tends to be procyclical during economic booms, driven by increased borrowing and political pressures to address social deficits, but policy makers are unable or unwilling to retrench during economic busts. This approach not only amplifies macroeconomic volatility but also plants the seeds for fiscal distress, which is typically addressed by diminishing the quantity and quality of public investment—with serious consequences for long-term growth. Labor market informality further complicates matters, rendering automatic stabilizers like unemployment insurance impractical. Instead, governments rely on public employment and social transfer programs, which are downwardly rigid and can contribute to the expansion of government size over time. Addressing these anomalies requires policy interventions beyond traditional recommendations. Implementing fiscal rules to restrain overspending during economic upturns, enhancing the efficiency of public goods provision, and establishing mechanisms to adjust social programs during economic fluctuations are suggested approaches. In addition, measures to protect public investment and mitigate biases against pension benefits could aid in fostering long-term economic sustainability and welfare improvement. Public Spending Policies in Latin America and the Caribbean will be of interest to policy makers, researchers, and anyone with an interest in developing mechanisms for helping low- and middle-income economies weather economic storms. 2024-08-07T20:36:06Z 2024-08-07T20:36:06Z 2024-08-07 Book 978-1-4648-2069-4 (paper) 978-1-4648-2070-0 (electronic) Library of Congress Control Number: 2024910799 https://hdl.handle.net/10986/42022 10.1596/978-1-4648-2069-4 https://doi.org/10.1596/978-1-4648-2069-4 en_US Latin American Development Forum CC BY 3.0 IGO https://creativecommons.org/licenses/by/3.0/igo/ World Bank application/pdf application/pdf Washington, DC: World Bank |
| spellingShingle | CYCLICALITY PUBLIC SPENDING FISCAL IMBALANCES POLICY INTERVENTIONS SUSTAINABILITY POLITICAL PRESSURES LABOR MARKET Riera-Crichton, Daniel Vuletin, Guillermo Public Spending Policies in Latin America and the Caribbean |
| title | Public Spending Policies in Latin America and the Caribbean |
| title_full | Public Spending Policies in Latin America and the Caribbean |
| title_fullStr | Public Spending Policies in Latin America and the Caribbean |
| title_full_unstemmed | Public Spending Policies in Latin America and the Caribbean |
| title_short | Public Spending Policies in Latin America and the Caribbean |
| title_sort | public spending policies in latin america and the caribbean |
| topic | CYCLICALITY PUBLIC SPENDING FISCAL IMBALANCES POLICY INTERVENTIONS SUSTAINABILITY POLITICAL PRESSURES LABOR MARKET |
| url | https://hdl.handle.net/10986/42022 https://doi.org/10.1596/978-1-4648-2069-4 |
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