Vuletin, Guillermo

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Last updated: February 21, 2024
Guillermo Vuletin is a Senior Economist at the Office of the Chief Economist for Latin America and the Caribbean of the World Bank. He is also an Associate Editor of Economia, Journal of the Latin American and Caribbean Economic Association (LACEA). He received a PhD in Economics from the University of Maryland and an undergraduate degree and a MA in Economics from the Universidad Nacional de La Plata, Argentina. Prior to joining the World Bank, he was a Lead Economist at the Research Department of the Inter-American Development Bank. His research focuses on fiscal and monetary policies with a particular interest in macroeconomic policy in emerging and developing countries. His work has been published in the Journal of Monetary Economics, Journal of International Economics, American Economic Journal: Economic Policy, and Journal of Development Economics, as well as in other journals. His research has been featured in prominent media outlets, such as The Economist, The Wall Street Journal, The Financial Times, and The Washington Post, and other international and regional newspapers.
Citations 72 Scopus

Publication Search Results

Now showing 1 - 10 of 15
  • Publication
    Latin America and the Caribbean Economic Review, October 2023 - Wired: Digital Connectivity for Inclusion and Growth
    (Washington, DC: World Bank, 2023-10-04) Zambrano Riveros, Jorge Andres; Beylis, Guillermo; Maloney, William; Vuletin, Guillermo
    Latin America and the Caribbean continues to face adverse global headwinds: high interest rates, modest G-7 growth, soft commodity prices and uncertain prospects in China will all depress growth. Well-grounded policy responses have led to largely recovering employment and income losses from the pandemic and falling rates of inflation. However, the region faces the mutually reinforcing triple challenges of low growth, limited fiscal space, and citizen dissatisfaction. Expanding digital connectivity offers a possibility to make progress on all three fronts. To maximize the social benefits of connectivity as well as to ensure that it does not exacerbate spatial, educational, gender or racial inequalities, three challenges are important to address: first, expanding coverage to the remaining unconnected areas as well as improving the quality of service; second, increasing the productive use of existing infrastructure, and; third, as with any other infrastructure "hardware," investments in "software" - such as digital and traditional skills, managerial capabilities, supportive regulatory frameworks, and deeper financial markets are critical.
  • Publication
    The Promise of Integration: Opportunities in a Changing Global Economy
    (World Bank, Washington DC, 2023-04-04) Riera-Crichton, Daniel; Maloney, William; Vuletin, Guillermo; Ianchovichina, Elena Ivanova; Beylis, Guillermo; Vuletin, Guillermo
    The Latin America and the Caribbean (LAC) region has proved to be relatively resilient in the face of increased debt stress, stubborn inflation, and uncertainty arising from the Russian invasion of Ukraine. Income and employment have largely recovered from the pandemic, poverty has receded, and markets remain guardedly optimistic about the near future. However, global uncertainty is rising, including a recent wave of bank failures in the US and Europe. Strengthening resilience, both on the health and macroeconomic fronts, will be paramount. Progress remains pending in both vaccination coverage and health system preparedness, while the institutionality of macroeconomic policy in some countries is being questioned. The evolution of the global economy is providing two new areas of opportunity for the region: the trend toward nearshoring-moving production closer to the US and European markets-and the imperative to combat climate change, which is giving the region a new comparative advantage in sun, wind, hydro, and natural capital. Taking advantage of these will require greater integration into the global economy. Yet, paradoxically, in the face of these opportunities. LAC is becoming less integrated. Trade intensity has largely stagnated, and foreign direct investment (FDI) to most countries has declined. Beyond the long-term structural reforms needed to reduce systemic risk, raise the level and quality of education, invest in infrastructure, and ensure well-functioning financial markets, this report calls to preserve the reputational gains of the past 20 years in terms of macro stability and streamlining regulation dealing with customs and transport to lower the cost of doing business in the region. Export promotion agencies and investment promotion agencies can also help as they have proven track records. A comprehensive approach to both shorter- and longer-term reforms could move LAC toward a renewed and more dynamic engagement with the global economy.
  • Publication
    The Macroeconomic Effects of Macroprudential Policy: Evidence from a Narrative Approach
    (World Bank, Washington, DC, 2022-08) Rojas, Diego; Vegh, Carlos; Vuletin, Guillermo; Vuletin, Guillermo
    This paper analyzes the macroeconomic effects of macroprudential policy—in the form of legal reserve requirements—in three Latin American countries (Argentina, Brazil, and Uruguay). To correctly identify innovations in changes in legal reserve requirements, a narrative approach—based on contemporaneous reports from the IMF and central banks in the spirit of Romer and Romer (2010)—is developed in which each change is classified into endogenous or exogenous to the business cycle. This distinction is critical in understanding the macroeconomic effects of reserve requirements. In particular, while output falls in response to exogenous increases in legal reserve requirements, it is not affected when using all changes and relying on traditional time-identifying strategies. This bias reflects the practical relevance of the misidentification of endogenous countercyclical changes in reserve requirements. The empirical frontier is also pushed along two important dimensions. First, in measuring legal reserve requirements, both the different types of legal reserve requirements in terms of maturity and currency of denomination as well as the structure of deposits are taken in account. Second, since in practice reserve requirement policy is tightly linked to monetary policy, the study jointly analyze the macroeconomic effects of changes in central bank interest rates. To properly identify exogenous central bank interest rate shocks, the Romer and Romer (2004) strategy is used.
  • Publication
    Fooled by the Cycle: Permanent versus Cyclical Improvements in Social Indicators
    (Washington, DC : World Bank, 2022-06) Camarena, José Andrée; Galeano, Luciana; Morano, Luis; Puig, Jorge; Riera-Crichton, Daniel; Vegh, Carlos; Venturi, Lucila; Vuletin, Guillermo; Vuletin, Guillermo
    This paper studies the time series behavior of a set of widely-used social indicators and uncovers two important stylized facts. First, not all social indicators are created equal in terms of the importance of cyclical fluctuations. While some social indicators such as the unemployment rate and monetary poverty show large cyclical fluctuations, other social measures such as the Human Development Index are, by construction, dominated by long-run trends. Second, interestingly, yet not surprisingly, a large part of the cyclical fluctuations in social indicators can be explained by cyclical changes in income (proxied by real GDP per capita). For this reason, countries with large cyclical income volatility exhibit, in turn, large cyclical changes in some of these social indicators (particularly in those indicators that are more prone to cyclical fluctuations). Since cyclical income volatility is much larger in the developing world, these two critical stylized facts raise fundamental issues regarding the duration of improvements in social indicators (like the ones observed in many developing countries during the last commodity super-cycle). After a detailed conceptual and methodological discussion of these issues, and relying on a global sample of industrial and developing countries, this paper digs deeper into the importance of cyclical versus permanent components by extending the seminal contribution of Datt and Ravallion (1992). In particular, it shows that more than 40 percent of the fall in monetary poverty observed in Latin America and the Caribbean during the so-called Golden Decade can be attributed to cyclical changes in income. While in principle universal, these concerns are particularly relevant in the developing world where, compared to developed countries, output volatility is larger and driven, to a large extent, by external factors (such as commodity prices).
  • Publication
    Social Transfer Multipliers in Developed and Emerging Countries: The Role of Hand-to-Mouth Consumers
    (World Bank, Washington, DC, 2021-04) Bracco, Jessica; Galeano, Luciana; Juarros, Pedro; Riera-Crichton, Daniel; Vuletin, Guillermo; Vuletin, Guillermo
    This paper estimates the macroeconomic effects of social transfer payments to individuals for a sample of 23 developed and Latin American countries. The findings show that the social transfer multiplier is 0.3 in developed countries, but 0.9 in Latin American economies. The paper studies the role of hand-to-mouth consumers, who have no access to financial markets and a high marginal propensity to consume, as a first order factor to explain the heterogeneity in the size of social transfer multipliers. Using survey-based data from the Global Findex dataset, the paper finds that the average share of the population living hand-to-mouth is 23 percent in developed economies versus 60 percent in Latin American countries. This evidence is interpreted with a two-agent New Keynesian model. The findings show that the difference in the share of hand-to-mouth consumers explains 80 to 90 percent of the difference in the estimated social transfer multipliers. The paper also documents that the share of hand-to-mouth individuals in emerging countries is in general 47 percent which suggests that a larger social transfer multiplier may be expected for this type of economy.
  • Publication
    Effects of the Business Cycle on Social Indicators in Latin America and the Caribbean: When Dreams Meet Reality
    (Washington, DC: World Bank, 2019-04-04) Vegh, Carlos A.; Riera-Crichton, Daniel; Puig, Jorge; Camarena, José Andrée; Galeano, Luciana; Morano, Luis; Venturi, Lucila; Vuletin, Guillermo
    After mediocre growth in 2018 of 0.7 percent. LAC is expected to perform only marginally better in 2019 (growth of 0.9 percent) followed by a much more solid growth of 2.1 percent in 2020. LAC will face both internal and external challenges during 2019. On the domestic front. the recession in Argentina; a slower than expected recovery in Brazil from the 2014-2015 recession, anemic growth in Mexico. and the continued deterioration of Venezuela. present the biggest challenges. On the external front. the sharp drop in net capital inflows to the region since early 2018 and the monetary policy normalization in the United States stand among the greatest perils. Furthermore, the recent increase in poverty in Brazil because of the recession points to the large effects that the business cycle may have on poverty. The core of this report argues that social indicators that are very sensitive to the business cycle may yield a highly misleading picture of permanent social gains in the region.
  • Publication
    Policy Implications of Non-linear Effects of Tax Changes on Output
    (World Bank, Washington, DC, 2019-01) Gunter, Samara; Riera-Crichton, Daniel; Vegh, Carlos; Vuletin, Guillermo; Vuletin, Guillermo
    An earlier paper titled "Non-linear effects of tax changes on output: The role of the initial level of taxation," estimated tax multipliers using (i) a novel dataset on value-added taxes for 51 countries (21 industrial and 30 developing) for the period 1970-2014, and (ii) the so-called narrative approach developed by Romer and Romer (2010) to properly identify exogenous tax changes. The main finding is that, in line with existing theoretical distortionary and disincentive-based arguments, the effect of tax changes on output is highly non-linear. The tax multiplier is essentially zero under relatively low/moderate initial tax rate levels and more negative as the initial tax rate and the size of the change in the tax rate increase. This companion paper first shows that these findings have important policy implications, given that the initial level of taxes varies greatly across countries and thus so will the potential output effect of changing tax rates. The paper then turns to some specific policy applications. It focuses on the relevance of the arguments for revenue mobilization in countries with low levels of provision of public goods and social and infrastructure gaps, as well as in commodity-dependent countries. The paper then considers some practical implications for the standard debt sustainability analysis. Lastly, it evaluates the implications of the findings for the Laffer curve.
  • Publication
    Non-Linear Effects of Tax Changes on Output: The Role of the Initial Level of Taxation
    (World Bank, Washington, DC, 2018-12) Gunter, Samara; Riera-Crichton, Daniel; Vegh, Carlos; Vuletin, Guillermo; Vuletin, Guillermo
    This paper estimates the effect of worldwide tax changes on output following the narrative approach developed for the United States by Romer and Romer (2010). The analysis uses a novel dataset on value-added taxes for 51 countries (21 industrial and 30 developing) for the period 1970-2014 to identify 96 tax changes. It then uses contemporaneous economic records to classify such changes as endogenous or exogenous to current (or prospective) economic conditions. In line with theoretical distortionary and disincentive-based arguments, and using only exogenous tax changes, the main finding is that the effect of tax changes on output is highly non-linear. The tax multiplier is essentially zero under relatively low/moderate initial tax rate levels and more negative as the initial tax rate and the size of the change in the tax rate increase. Based on a global sample, these novel non-linear findings suggest that the recent consensus pointing to large negative tax multipliers in industrial countries, particularly in Europe (e.g., Alesina, Favero, and Giavazzi, 2015), (i) is not a robust empirical regularity, and (ii) is mainly driven by high initial tax rates in these countries. The paper also shows that the bias introduced by misidentification of tax shocks critically depends on the procyclical or countercyclical nature of endogenous tax changes. The relevance of the arguments is evaluated both for the novel global sample and for Romer and Romer's U.S. dataset.
  • Publication
    From Known Unknowns to Black Swans: How to Manage Risk in Latin America and the Caribbean
    (Washington, DC: World Bank, 2018-10-05) Vegh, Carlos A.; Riera-Crichton, Daniel; Medina, Juan Pablo; Friedheim, Diego; Morano, Luis; Venturi, Lucila; Vuletin, Guillermo
    After a growth recovery, with an expansion of 1.1 percent in 2017, the region has encountered some bumps in the road. The Latin America and the Caribbean (LAC) region is expected to grow at a modest rate of 0.6 percent in 2018 and 1.6 percent in 2019. This slowdown in the region’s recovery is mainly explained by the crisis that started in Argentina in April, the growth slowdown in Brazil, and the continuing economic, social, and humanitarian collapse in Venezuela. Furthermore, net capital inflows to the region have fallen dramatically since early 2018, bringing once again to the fore the risks faced by LAC. In addition, natural disasters such as earthquakes and hurricanes have brought devastation to the region with disturbing frequency. The core of the report analyzes the foundations of risk, develops a theoretical framework to price risk instruments, and reviews how LAC has managed risk in practice. The overall message of the report is that there are different types of risk: (i) those that follow standard probabilistic distributions that can be easily insured by the market; and (ii) those that exhibit fat-tails (i.e., non-negligible probabilities of extreme events) that are much harder to ensure by the market (like earthquakes). Finally, there are “black swans” that, by definition, are unpredictable events that cannot be insured and force countries to rely exclusively on ex-post aid and/or broad preventive measures. In other words, the fatter are the tails of a distribution, the less market insurance is available, and the more countries will have to rely on ex-post aid. Yet progress in managing risk continues to be made (the Catastrophe Bond for earthquakes in the Pacific Alliance, recently sponsored by the World Bank, being an outstanding example). This would have been unthinkable some time ago. New knowledge and insurance schemes, all supported by institutions such as the World Bank, will undoubtedly make LAC a safer region to live and prosper.
  • Publication
    Fiscal Adjustment in Latin America and the Caribbean: Short-Run Pain, Long-Run Gain?
    (Washington, DC: World Bank, 2018-04-17) Vegh, Carlos A.; Riera-Crichton, Daniel; Friedheim, Diego; Morano, Luis; Camarena, José Andrée; Vuletin, Guillermo
    After a growth slowdown that lasted six years, the Latin America and the Caribbean (LAC) region has finally turned the corner and resumed growth at a modest rate of 1.1 percent in 2017 and 1.8 percent expected in 2018. This reflects a more favorable external environment, particularly a recovery in commodity prices. In spite of the benign external environment, most LAC countries still face a fragile fiscal situation. While gradual fiscal adjustments have started in several countries, most countries are still running fiscal deficits and debt levels are high. Further fiscal consolidation is needed to preserve the substantial gains achieved by the region in recent times, in terms of lower inflation, less poverty and inequality, and inclusive growth. This Semiannual Report analyzes the complex decisions regarding fiscal adjustment policies.