Fiscal Rules and the Behavior of Public Investment in Latin America and the Caribbean: Towards Growth-Friendly Fiscal Policy?: The case of Argentina

Abstract

This paper analyzes the implementation of Fiscal Rules (FR) in Argentina. Several clear attempts to establish a FR at the national level are identified. The analysis suggests that the environment matters. The only FR that was binding in the period was approved in 2004 during an economic boom, with the country under a program with the IMF and with high political support. During the world financial crisis the expenditure ceilings were relaxed, however, and current primary expenditures soared. Simulations show that a countercyclical fund could have been implemented even after reducing highly distorting taxes at the federal and provincial levels, and at the same time securing a high level of capital expenditure as a share of GDP, had Argentina complied with the 2004 FR. Moreover, an econometric exploration of the link between flexible FRs and public investment finds that a flexible FR helps to mitigate the negative effects of fiscal consolidations on provincial public investment. Based on the previous analysis, guidelines for a proposal for a FR in Argentina are provided.

Fiscal Rules: Challenges and Reform Opportunities for Emerging Markets

“…to include an additional rule limiting real current expenditure growth, net of maintenance spending, to that of real GDP (Mendoza Bellido et al, 2021). Counterfactual simulations in other Latin American countries suggest that complying with such rules could open up fiscal space for increasing capital expenditures (Artana et al, 2021;Bonomo et al, 2021).…”

Akilli Mali̇ye Poli̇ti̇kasi Ve Türki̇ye Değerlendi̇rmesi̇

“…Politikalara ihtiyatlı bir yapı kazandıran mali kurallar artı ve eksi yönlerine rağmen giderek daha popüler bir hal almıştır. 1995 yılında mali kuralı benimsemiş ülkelerin sayısı 25'ten az iken, 2015 yılına gelindiğinde ise mali kuralı benimseyen ülkelerin sayısı 92'ye yükselmiştir(Artana, Moskovits, Puig, & Templado, 2021). Ülkelerin uyguladıkları mali kurallar türleri açısından dikkate alındığında ise diğer kuralara göre açık ve borç kuralına dayalı mali kurallar daha yaygın ve uzun süreden beri uygulanmıştır(Yükseler, 2010).…”