Person: Blanco, Fernando
Loading...
Author Name Variants
Blanco, Fernando
Fields of Specialization
Fiscal Policy, Macroeconomic Policy
Degrees
Externally Hosted Work
Contact Information
Last updated:January 31, 2023
Biography
Fernando Blanco is an economist specializing in macroeconomics and fiscal policy. He joined the World Bank in 2002 and has worked in the Latin America and Caribbean, Africa, South Asia, and Middle East and North Africa regions in the Macroeconomics, Trade, and Investment Global Practice. Currently, he is the principal economist for Europe and Central Asia at the International Finance Corporation in the World Bank Group. Prior to joining the Bank, he served as an associate researcher for the Institute of Applied Economics Research, a government think-tank in Brazil, and as a professor of Public Economics and International Economics at the Brazilian Institute of Capital Markets and the Pontifical Catholic University of Rio de Janeiro. He holds a PhD in Economics from the Pontifical Catholic University of Rio de Janeiro, Brazil.
5 results
Publication Search Results
Now showing1 - 5 of 5
Publication The Cyclicality of IFC Investments: To Be, or Not to Be, Procyclical(World Bank, Washington, DC, 2021-07) Sachdeva, Niharika; Blanco, FernandoThis paper presents empirical evidence on the cyclicality of investments made by the International Finance Corporation over the past 20 years and explores their implications for the International Finance Corporation’s investment strategy in the aftermath of the COVID-19 pandemic. An Independent Evaluation Group report on World Bank Group operations during the global financial crisis found that the International Finance Corporation’s role was “neutral to procyclical,” as it “did not increase investments in response to the crisis.” This study provides a more detailed assessment of the cyclical patterns of International Finance Corporation investment activity by using a longer time horizon of assessment rather than a specific point-in-time-episode, differentiating original commitments from disbursements, and disaggregating investments across regions and industries. The results of the study confirm that International Finance Corporation investment activity was overall procyclical during 2000–19, but this general pattern masks differences over time and across regions and industries. The paper also examines the relation between the cyclical patterns of International Finance Corporation investment activity and its financial performance. The results suggest that the procyclicality is linked with sounder asset quality (measured by nonperforming loan ratios) and higher profitability (measured by risk-adjusted return on capital), underscoring that prudent portfolio risk management and profit seeking strategies have coexisted with International Finance Corporation investment procyclicality. The procyclicality of International Finance Corporation operations is consistent with its institutional mandate of supporting private sector investment, which is usually procyclical, and the need to maintain an AAA credit rating. Nevertheless, the facts that commitments became less procyclical after the 2008 crisis and the cyclicality of investments varies across regions and industries suggest that there is scope for easing procyclicality without jeopardizing the International Finance Corporation’s financial sustainability. In this context, the International Finance Corporation’s COVID-19 Fast-Track Facility is a case in point for easing investment procyclicality. Moreover, from a medium-term perspective, a less procyclical investment strategy may be more in line with the International Finance Corporation’s 3.0 and Upstream initiatives, which aim at building pipelines of sound projects and prioritizing returns through long-term risk premia and, hence, are undeterred by short-term cyclical volatility.Publication Fiscal Rules and Economic Size in Latin America and the Caribbean(Washington, DC: World Bank, 2020-09-23) Blanco, Fernando; Saavedra, Pablo; Koehler-Geib, Friederike; Skrok, EmiliaFollowing the collapse of commodity prices in Latin America and the Caribbean (LAC) in 2014-15, many countries in the region were unable to cushion the impact of the shock in order to experience a more gradual adjustment, to a large extent because they had not built adequate fiscal buffers during the commodities’ windfall from 2010-14. Many LAC countries entered 2020 and the COVID-19 crisis in an even more difficult position, with rising debt and limited fiscal space to smooth the negative impacts of the pandemic and adequately support their economies. Fiscal policy in most LAC countries has been procyclical. Public expenditure and debt levels have expanded in good times and contracted in severe downswings due to insufficient fiscal buffers, making crises deeper. Fiscal rules represent a promising policy option for these and other economies. If well-designed and implemented, they can help build buffers during periods of strong economic performance that will be available during rainy days to smooth economic shocks. This book—which was prepared before the COVID-19 crisis—reviews the performance and implementation of different fiscal rules in the region and world. It provides analytical and practical criteria for policy makers for the design, establishment, and feasible implementation of fiscal rules based on each country's business cycle features, external characteristics, type of shocks faced, initial fiscal conditions, technical and institutional capacities, and political context. While establishing new fiscal rules would not help to attenuate the immediate effects of this pandemic crisis, higher debt levels in the aftermath of COVID-19 will demand rebuilding better and stronger institutional frameworks of fiscal policy in LAC and emerging economies globally. Having stronger fiscal mechanisms that include fiscal rules can help countries prepare for the next crisis and should be on the front burner for policy makers in coming years. The findings and lessons discussed apply to economies of different sizes, with some differences under certain scenarios in terms of the technical design and criteria needed for implementation. In this book, policy makers will find that fiscal rules, if tailored to country characteristics, can work and be an essential fiscal tool for larger and particularly smaller economies.Publication Do Coronavirus Containment Measures Work? Worldwide Evidence(World Bank, Washington, DC, 2020-12) Emrullahu, Drilona; Blanco, Fernando; Soto, RaimundoUsing a daily data base covering 158 countries during January to August 2020, this paper assesses the effectiveness of coronavirus containment measures in reducing contagion and death rates. To estimate the effectiveness of different containment measures, the paper uses a methodological approach that takes into consideration the persistence in the dynamics between coronavirus containment measures and contagion/death rates, countries’ idiosyncratic characteristics, and the endogeneity of the containment measures. To obtain efficient estimates of the effect of coronavirus containment measures on contagion and death rates, a dynamic panel-data technique is used, complemented by efficient instruments for the decision of adopting coronavirus containment measures. The results show that countries with better health systems, higher temperatures, and more democratic regimes tended to delay the adoption of coronavirus containment measures. The results also detect demonstration effects as the early adoption of coronavirus containment measures in Western Europe led other countries to accelerate their adoption. Using predictions from the estimated model, it is possible to benchmark the timing of adoption of coronavirus containment measures and assess whether their adoption was timely or not and if they were lifted prematurely or not. The findings of this exercise show that countries with timely adopted coronavirus containment measures restricted activities, meanwhile they lagged in the adoption of measures restricting individual liberties. The evidence indicates that most countries resisted the urge to lift restrictions in advance, once they have been in place: over 60 percent of the countries have reacted as predicted by our econometric models, maintaining coronavirus containment measures in place until contagion rates receded. Nevertheless, around one-quarter of the countries lifted their restrictions one month or more ahead of what the worldwide evidence would have suggested, in particular by removing lockdowns and re-opening workplaces. Finally, the results show that coronavirus containment measures have been effective in reducing contagion and death rates, but there are differences in the effectiveness among them, and restrictions on activities have been more effective than restrictions on personal liberties.Publication The Quality of Fiscal Adjustment and the Long-Run Growth Impact of Fiscal Policy in Brazil(World Bank, Washington, DC, 2006-09) Blanco, Fernando; Herrera, SantiagoThe authors describe the main trends of Brazil's fiscal policy during the past decade and analyze (1) the ability to raise the primary surplus in response to external shocks, (2) the pro-cyclical nature of fiscal policy, and (3) the long-run impact of government expenditure composition and taxation. They analyze the use of the primary balance as a policy tool within the Drudi-Prati model, wherein the government uses the primary balance to reveal its commitment to service its debt. The authors verify that both the debt ratio and the primary balance are determinants of spreads and credit ratings in Brazil. But the relationship is nonlinear: the impact of the primary balance on spreads is amplified as the debt ratio increases. Using an Autoregressive Distributed Lag (ARDL) approach, the authors analyze the relationship between the primary balance and economic activity, finding a positive correlation in the long run. However, in the short run fiscal expansions are associated with primary balance reductions and vice-versa during output contractions, confirming the procyclical nature of fiscal policy in the short run. The authors use two approaches, ARDL and a cointegrating value at risk (VAR), to analyze the interaction between public expenditure composition and taxation on growth. Similar results are obtained: large elasticities of output with respect to capital stocks, a significant negative impact of taxation on long-run GDP, and a negative impact of increasing government consumption and transfer payments on GDP. These results shed light on the contribution of fiscal policy to disappointing growth performance in Brazil during the past decade.Publication Brazil - Improving Fiscal Circumstances for Growth(World Bank, Washington, DC, 2007-03) Weisman, Ethan; Blanco, FernandoFiscal circumstances in Brazil are a key constraint to faster and more robust economic growth. In part, this is due to accumulated public sector deficits in earlier periods that are represented in Brazil's persistently high net public sector debt (currently about 50 percent of GDP). During the 1980s and mid-1990s high debt was associated with debt crises and hyperinflation. Budget rigidity, especially revenue earmarking, restricts policy action to resolve the fiscal conundrum.