EconPapers    
Economics at your fingertips  
 

Effects of Fiscal Consolidations in Latin America

André Diniz ()
Additional contact information
André Diniz: São Paulo School of Economics—Fundacao Getulio Vargas

IMF Economic Review, 2018, vol. 66, issue 4, No 3, 694-731

Abstract: Abstract We use data on structural primary balances for Latin America to estimate effects of fiscal consolidations. Identification relies on a doubly robust estimator that controls for the endogeneity of fiscal policy using inverse probability weighting. Results suggest a negative multiplier on impact, with the economy starting to recover from the second year on and expanding after 5 years. Revenue-based adjustments are more contractionary on impact than expenditure-based adjustments. Among demand components, we find consumption to be generally less responsive to consolidations than investment. Results also depend on the initial levels of debt and taxation. In comparison with OECD evidence, Latin American countries display larger, but stop-and-go consolidations, with state-dependent long-run multipliers.

Keywords: E62; H6 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://link.springer.com/10.1057/s41308-018-0069-1 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:imfecr:v:66:y:2018:i:4:d:10.1057_s41308-018-0069-1

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41308/PS2

DOI: 10.1057/s41308-018-0069-1

Access Statistics for this article

More articles in IMF Economic Review from Palgrave Macmillan, International Monetary Fund
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2025-03-19
Handle: RePEc:pal:imfecr:v:66:y:2018:i:4:d:10.1057_s41308-018-0069-1