Publication:
Public Spending Policies in Latin America and the Caribbean: When Cyclicality Meets Rigidities

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dc.contributor.authorRiera-Crichton, Daniel
dc.contributor.authorVuletin, Guillermo
dc.date.accessioned2024-08-07T20:36:06Z
dc.date.available2024-08-07T20:36:06Z
dc.date.issued2024-08-07
dc.description.abstractIn low- and middle-income economies, public spending policies diverge significantly from those of industrialized nations due to structural differences. Low- and middle-income economies often make long-term commitments based on short-term economic conditions, leading to mismatches between spending maturity and economic cycles. These mismatches can exacerbate fiscal imbalances and hinder economic growth by forcing compositional changes in public spending. "Public Spending Policies in Latin America and the Caribbean: When Cyclicality Meets Rigidities" describes significant cyclical behavior variations in low- and middle-income markets. Contrary to Keynesian principles, public spending in these economies tends to be procyclical during economic booms, driven by increased borrowing and political pressures to address social deficits, but policy makers are unable or unwilling to retrench during economic busts. This approach not only amplifies macroeconomic volatility but also plants the seeds for fiscal distress, which is typically addressed by diminishing the quantity and quality of public investment—with serious consequences for long-term growth. Labor market informality further complicates matters, rendering automatic stabilizers like unemployment insurance impractical. Instead, governments rely on public employment and social transfer programs, which are downwardly rigid and can contribute to the expansion of government size over time. Addressing these anomalies requires policy interventions beyond traditional recommendations. Implementing fiscal rules to restrain overspending during economic upturns, enhancing the efficiency of public goods provision, and establishing mechanisms to adjust social programs during economic fluctuations are suggested approaches. In addition, measures to protect public investment and mitigate biases against pension benefits could aid in fostering long-term economic sustainability and welfare improvement. Public Spending Policies in Latin America and the Caribbean will be of interest to policy makers, researchers, and anyone with an interest in developing mechanisms for helping low- and middle-income economies weather economic storms.en
dc.identifier.doi10.1596/978-1-4648-2069-4
dc.identifier.doihttps://doi.org/10.1596/978-1-4648-2069-4
dc.identifier.isbn978-1-4648-2069-4 (paper)
dc.identifier.isbn978-1-4648-2070-0 (electronic)
dc.identifier.otherLibrary of Congress Control Number: 2024910799
dc.identifier.urihttps://hdl.handle.net/10986/42022
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.relation.ispartofseriesLatin American Development Forum
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectCYCLICALITY
dc.subjectPUBLIC SPENDING
dc.subjectFISCAL IMBALANCES
dc.subjectPOLICY INTERVENTIONS
dc.subjectSUSTAINABILITY
dc.subjectPOLITICAL PRESSURES
dc.subjectLABOR MARKET
dc.titlePublic Spending Policies in Latin America and the Caribbeanen
dc.title.subtitleWhen Cyclicality Meets Rigiditiesen
dc.typeBook
dspace.entity.typePublication
okr.crossref.titlePublic Spending Policies in Latin America and the Caribbean: When Cyclicality Meets Rigidities
okr.date.disclosure2024-08-07
okr.date.doiregistration2025-04-07T08:42:42.091454Z
okr.date.doiregistration2025-04-08T16:21:02.223779Z
okr.date.doiregistration2025-04-09T02:52:54.102493Z
okr.date.doiregistration2025-04-15T12:10:22.124466Z
okr.doctypePublications & Research
okr.doctypePublications & Research::Publication
okr.docurlhttps://documents.worldbank.org/en/publication/documents-reports/documentdetail/099080824155513533/p16803716b6ce90741ad27127ce696cac36
okr.guid099080824155513533
okr.identifier.docmidP168037
okr.identifier.doi10.1596/978-1-4648-2069-4
okr.identifier.report192950
okr.region.geographicalCaribbean
okr.region.geographicalLatin America
okr.topicFinance and Financial Sector Development::Public & Municipal Finance
okr.unitLCRCE
relation.isAuthorOfPublicationfd2ab4cd-3ad9-41a0-9477-fb219fe39971
relation.isAuthorOfPublication49ff004e-c20e-42e0-86da-1daf69ef42d7
relation.isAuthorOfPublication.latestForDiscoveryfd2ab4cd-3ad9-41a0-9477-fb219fe39971
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