Volatility and growth: How can fiscal policy boost equitable growth in Argentina?

Volatility hurts growth, especially in low-income and emerging countries that are even more vulnerable to external shocks, which implies more risk and lower stability. The role of fiscal policies thus is not only to boost growth, but to cater for sustainable and equitable growth; especially for the poor who are the most vulnerable to market volatility.

“What can fiscal policy do to boost equitable growth in Argentina?”

Jimena Zúñiga, Marcelo Capello, Inés Butler and Néstor Grión from the IERAL of the Mediterranean Foundation attempt to provide an answer to this question in their research “A cycle-adjusted fiscal rule for sustainable and more equitable growth in Argentina”, which Jimena presented at the GDN 14th Annual Conference. In order to do this, they first define the main binding constraints to growth in Argentina, then they investigate which fiscal reform strategy is the most suitable to specifically tackle these constraints. They argue that for a reform strategy to be effective in Argentina, it must be inclusive; involving all levels of governmental sectors, and designed to stabilize key macroeconomic variables.

The proposed model is a cycle-adjusted fiscal rule, which is found to be effective in reducing Argentina’s macroeconomic volatility. In turn, this will result in long-term growth and an increase in welfare of the poor families. In the video below, Jimena Zúñiga explains the main pillars of this research and also briefly highlights the main findings and their potential impact on promoting sustainable and equitable growth in Argentina.

Jimena Zúñiga, IERAL of the Mediterranean Foundation

Read this Paper: A cycle-adjusted fiscal rule for sustainable and more equitable growth in Argentina

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: