Institutional Arrangements and Fiscal Performance: The Latin American Experience

Abstract

As we shall see later, in addition to income per capita, the degree of openness of an economy to international trade, the degree of indebtedness, and the age distribution of the population are other important determinants of the size of government. 4. We report here the median rather than the average due to the existence of outliers in Latin America, such as Nicaragua and Guyana, two small countries that are very highly indebted. For the OECD countries, the median and the mean are virtually the same. The average for Latin American countries is reported in table 5.1. 5. The same association can he found in the case of subnational governments in the United States and Canada.

Was this time different?: Fiscal policy in commodity republics

“…A basic prediction of the "voracity approach" is that political systems in which power is diffused among a number of agents will witness a higher degree of fiscal procyclicality relative to a unitary system. This is what Stein et al (1999) and Lane (2002) find, using different country samples and varying measures of power dispersion. Conversely, Arezki and Brückner (2010) show that commodity price booms lead to increased government 5 See also Velasco (1998) and (2003) for applications of that model to a fiscal framework.…”

“…Cuddington (1989), Talvi and Vegh (1995) and Sinnott (2009), among others, document that governments save too little or even disave in booms. Procyclicality is most evident in Latin America (Gavin et al 1996, Gavin and Perotti 1997, Stein et al 1999 but is also present in OECD countries (Talvi and Vegh 1999, Arreaza et al 1999, Lane 1999and 2003.…”

Measuring US Presidents’ Political Commitment for Fiscal Discipline Between 1920 and 2008

“…A first group of economists, even considering the potential influence of preferences, prefer to consider institutions as if they were completely exogenous. This is the choice taken by Bayoumi and Eichengreen (1995) and Stein, Talvi and Grisanti (1998). Other authors, like Von Hagen and Harden (1994), Bayoumi and Eichengreen (1995), Poterba (1994) or Alesina and Perotti (1997), consider, for different theoretical reasons, that fiscal preferences have great chances to produce a minor impact on empirical results.…”

Improving Fiscal Governance in Emerging Economies: Multilateral Support to Budget Oversight and Public Sector Auditing

“…Such initiatives tend to challenge the prevailing consensus on the most adequate institutional arrangement for guaranteeing fiscal responsibility (Alesina and Perotti 1995;Alesina et al 1999;Stein et al 1998). Economic orthodoxy posits that the centralisation of budgetary systems and the concentration of budgetary powers within the executive are 'more likely to enforce fiscal restraint, avoid large and persistent deficits and implement fiscal adjustments more promptly' (Alesina and Perotti 1996:7).…”