Fiscal Policy for Stable and Equitable Growth in Latin America

46 Pages Posted: 15 Feb 2006

See all articles by Vito Tanzi

Vito Tanzi

International Monetary Fund (IMF); National Bureau of Economic Research (NBER)

Ke-young Chu

International Monetary Fund (IMF) - Fiscal Affairs Department

Date Written: November 2, 1989

Abstract

The resumption of economic growth in Latin America is predicated on the successful restoration of fiscal discipline and stabilization. In restoring fiscal discipline, the mix of policy instruments should aim at maximizing efficiency in the use of domestic and foreign resources. Poverty alleviation in Latin America is not likely to be achieved, in the near future, by economic growth. Policy should promote a more equitable distribution of income. While fiscal policy can play an important role in this process, it is important to realize that the current high domestic inflation in many Latin American countries implies that expanding social programs has high social costs. Fiscal policy should aim at increasing the income share for the poor by making the tax system more efficient and by reforming the existing social programs to make them more effectively targeted toward the poor.

JEL Classification: 321, 322, 323, 914

Suggested Citation

Tanzi, Vito and Chu, Ke-young, Fiscal Policy for Stable and Equitable Growth in Latin America (November 2, 1989). IMF Working Paper No. 89/93, Available at SSRN: https://ssrn.com/abstract=885058

Vito Tanzi (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Tax Policy Division Fiscal Affairs Department
Washington, DC 20431
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ke-young Chu

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

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