Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/115440 
Year of Publication: 
2013
Series/Report no.: 
IDB Working Paper Series No. IDB-WP-439
Publisher: 
Inter-American Development Bank (IDB), Washington, DC
Abstract: 
This paper seeks to identify the most promising fiscal strategy to boost long-term economic growth in Argentina and quantify its effects. To this end, the authors updated a growth-diagnostics study for Argentina and corroborated that low appropriability of social returns and insufficient public infrastructure are key constraints to private investment. Further, low appropriability stands out among the key constraints to productivity-enhancing activities. Because low appropriability is largely rooted in macroeconomic volatility, the authors argue that a cycle-adjusted fiscal rule is one of the most promising fiscal reforms the country could implement to tackle this problem, and discuss the specific design features that such a rule could include. Then, the authors construct a model reflecting the stylized facts of the Argentine Republic's fiscal federalism structure to assess the effect that a cycle-adjusted fiscal rule, in different variants, would have on the volatility of key macro variables. The authors find that the rule would meaningfully reduce macroeconomic volatility, thereby contributing to improved appropriability and long-term growth.
Subjects: 
Macroeconomic policy
growth
fiscal policy
fiscal rules
Argentina
Latin America
JEL: 
E62
H00
O40
O54
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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