scholarly journals Public Investment and Fiscal Crisis in Brazil: Finding Culprits and Solutions

2021 ◽  
Author(s):  
Marco Bonomo ◽  
Claudio R. Frischtak ◽  
Paulo Ribeiro
Keyword(s):  
Narrative Analysis ◽  
Public Investment ◽  
National Level ◽  
Fiscal Crisis ◽  
Fiscal Rules ◽  
Steady Increase ◽  
Empirical Estimation ◽  
Fiscal Management ◽  
Fiscal Conditions ◽  
Effective Instrument

We investigate the relation between existing fiscal rules and investments in the context of a fiscal crisis in Brazil. We analyze existing fiscal rules at national and subnational levels, their enforcement, and proposed alternatives. Using narrative analysis, case studies, interviews, empirical estimation, and model simulations, we conclude that public investment is not closely related to fiscal rules in Brazil but is mainly determined by fiscal conditions both at national and subnational (state) levels. It is the steady increase of personnel expenditures in real terms that underlies the fiscal deterioration of the last decade, despite the existence of fiscal rules devised to prevent it. We argue that a constitutional rule limiting subnationals personnel expenditures to 50 percent of net revenues, triggering adjustment measures when reaching 47.5 percent, would be an effective instrument for subnational fiscal management, opening fiscal space for increasing investments. At the national level, despite the existence of several fiscal rules, the only effective fiscal anchor is the primary expenditure ceiling introduced in 2016, which has successfully curbed expenditures, including those of the judiciary and legislature.

Fiscal Rules and the Behavior of Public Investment in Latin America and the Caribbean: Towards Growth-Friendly Fiscal Policy?: The case of Argentina

2021 ◽  
Author(s):  
Daniel Artana ◽  
Cynthia Moskovits ◽  
Jorge Puig ◽  
Ivana Templado
Keyword(s):  
Capital Expenditure ◽  
Previous Analysis ◽  
Public Investment ◽  
National Level ◽  
Political Support ◽  
Fiscal Rules ◽  
Negative Effects ◽  
The Caribbean ◽  
Economic Boom ◽  
High Level

This paper analyzes the implementation of Fiscal Rules (FR) in Argentina. Several clear attempts to establish a FR at the national level are identified. The analysis suggests that the environment matters. The only FR that was binding in the period was approved in 2004 during an economic boom, with the country under a program with the IMF and with high political support. During the world financial crisis the expenditure ceilings were relaxed, however, and current primary expenditures soared. Simulations show that a countercyclical fund could have been implemented even after reducing highly distorting taxes at the federal and provincial levels, and at the same time securing a high level of capital expenditure as a share of GDP, had Argentina complied with the 2004 FR. Moreover, an econometric exploration of the link between flexible FRs and public investment finds that a flexible FR helps to mitigate the negative effects of fiscal consolidations on provincial public investment. Based on the previous analysis, guidelines for a proposal for a FR in Argentina are provided.

scholarly journals Do Fiscal Rules Constrain Fiscal Policy in Romania?

2020 ◽  
Author(s):  
Alina Daniela Vodă ◽  
Gabriela Dobrotă ◽  
Loredana Andreea Cristea ◽  
Bianca Ciocanea
Keyword(s):  
Sustainable Development ◽  
Fiscal Policy ◽  
Granger Causality ◽  
National Level ◽  
Granger Causality Test ◽  
Business Environment ◽  
Economic Life ◽  
Fiscal Sustainability ◽  
Fiscal Rules ◽  
Causality Test

At both macroeconomic and national level, in recent decades, European tax policies have shown a particular interest in addressing the spectrum of risk issues in terms of maturing the business environment and the lack of sustainable development of the economy. In Romania there has been a significant increase in public debt, which is increasingly threatening fiscal sustainability. This is due to fiscal rules that restrict the applicability of fiscal policy to balancing the national economy. However, fiscal policy did not act in the direction of economic recovery during the crisis that started in the last quarter of 2008, which had a negative impact on the Romanian business environment. Objectively, fiscal policy should manifest itself as a general framework of the economy on the basis of which to develop fiscal rules that act in the direction of sustainable development of the business environment and implicitly, of socio-economic life. The research carried out referred to identify how fiscal rules in Romania restrict the application of fiscal policy as well as whether there is an explicit concordance between them. The research methodology aimed to use the ARDL model to apply the Granger causality test, using quarterly data for a set of four indicators, being identified that Romanian fiscal rules restrict fiscal policy. The achieved results highlighted the fact that fiscal rules restrict fiscal policy, being identified a long-run relationship between the analyzed variables and implicitly, a state of instability of the fiscal system in Romania. Keywords: fiscal policy, autoregressive distributed-lagged model, Granger causality test.

Fiscal Responsibility and Multi-Level Governance

2017 ◽  
pp. 167-192 ◽  
Author(s):  
Enrico Guarini ◽  
Anna Francesca Pattaro
Keyword(s):  
Public Policy ◽  
National Level ◽  
Deep Understanding ◽  
Holistic Approach ◽  
Fiscal Rules ◽  
Financial Behavior ◽  
Macro Level ◽  
Governance System ◽  
Fiscal Responsibility ◽  
Multi Level

Public-policy assumptions regarding sub-national governments' financial behavior are based on economic rationality. Therefore, to achieve fiscal stability at the macro level, central governments use fiscal rules both to constrain the behavior of local policymakers and to resolve deficit/debt biases. Using the Italian fiscal governance system as an illustrative example, this chapter considers both the tensions derived from achieving fiscal responsibility at the national level in a decentralized environment and the difficulties of maintaining adequate performance at the local government level. It is argued that the public management perspective can be helpful not only at the micro level but also at the macro level in developing public policies to promote fiscal stability. It is suggested that public policy should adopt a more holistic approach toward fiscal responsibility in multi-level governance environments. Such an approach requires a deep understanding of the determinants of financial viability of public sector organizations.

scholarly journals Growth-friendly fiscal rules? Safeguarding public investment from budget cuts through fiscal rule design

2021 ◽  
Vol 111 ◽  
pp. 102319
Author(s):  
Martín Ardanaz ◽  
Eduardo Cavallo ◽  
Alejandro Izquierdo ◽  
Jorge Puig
Keyword(s):  
Public Investment ◽  
Fiscal Rules ◽  
Budget Cuts ◽  
Fiscal Rule

Public infrastructure investment and fiscal sustainability in Latin America: incompatible goals?

2014 ◽  
Vol 41 (1) ◽  
pp. 29-50 ◽  
Author(s):  
Luis Carranza ◽  
Christian Daude ◽  
Angel Melguizo
Keyword(s):  
Developing Countries ◽  
Latin America ◽  
Latin American ◽  
Public Investment ◽  
Fiscal Rules ◽  
Infrastructure Investment ◽  
Fiscal Consolidation ◽  
Public Infrastructure ◽  
Content Type ◽  
Fiscal Space

Purpose – This paper aims to understand the relationship in developing countries between fiscal consolidation and public investment – a flexible part of the budget that is easier to cut during consolidation effort, but with potentially negative growth effects. Analyzing in detail the case of Peru, the paper explores alternative fiscal rules and frameworks that might help create fiscal space for infrastructure investment. Design/methodology/approach – The paper analyses trends in public and total infrastructure investment in six large Latin American economies, in the light of fiscal developments since the early 1980s. In particular, the paper explores the association between fiscal consolidations (improvements in the structural fiscal balance) and public infrastructure investment rates. In the second part, the paper analyzes recent changes in the fiscal framework of Peru and shows how they were conductive in creating additional fiscal space. Findings – The authors argue that post-crisis fiscal frameworks, notably fiscal rules that are increasingly popular in the region, should not only consolidate the recent progress towards debt sustainability, but also create the fiscal space to close these infrastructure gaps. These points are illustrated in a detailed account of recent developments in the fiscal framework and public investment in the Peruvian case. Originality/value – The paper contributes new evidence to the literature on fiscal consolidation and the composition of government expenditures. While the literature based on evidence from the 1990s has argued that fiscal consolidation plans in Latin America have almost always led to a significant reduction in public infrastructure investment, the paper finds less clear cut evidence when extending the analysis backwards (1980s) and forwards (2000s). The example of the case of Peru is used to explore fiscal institutions and rules that might be useful for other developing countries that face important infrastructure gaps.

scholarly journals Individual Treatment Effects of Budget Balance Rules

2020 ◽  
Vol 20 (274) ◽  
Author(s):  
Francesca Caselli ◽  
Daniel Stoehlker ◽  
Philippe Wingender
Keyword(s):  
Treatment Effects ◽  
National Level ◽  
Specific Treatment ◽  
Average Treatment Effect ◽  
Fiscal Rules ◽  
Individual Treatment ◽  
Significant Heterogeneity ◽  
Budget Balance ◽  
The Government ◽  
Country Specific

This paper investigates the heterogenous effects of budget balance rules on fiscal policy in a large sample of countries. To derive country-specific treatment effects of fiscal rules and conduct inference, we use a Synthetic Difference-in-Differences Method. Our results indicate that countries with a budget balance rule improve their fiscal balance on average by around 3 percent after its introduction. However, our results also illustrate the importance of going beyond the average treatment effect, as it masks significant heterogeneity in the country-specific impact of the rule. We find that countries that would have had large deficits in the absence of the fiscal rule exhibit positive treatment effects, thus reducing their budget deficits. On the other hand, countries with budget surpluses respond to fiscal rules by reducing their budget surplus and moving closer to the numerical target of the rule. Our results also suggest that rules’ design matters: a small overall number of fiscal rules, and the presence of a monitoring process outside the government, especially at the supra-national level, improve significantly the effectiveness of the rules.

scholarly journals Transient soundscape production

2021 ◽  
Vol 10 (1) ◽  
pp. 142-157
Author(s):  
Daniel Walzer
Keyword(s):  
Narrative Analysis ◽  
Cultural Production ◽  
Music Technology ◽  
Steady Increase ◽  
Artistic Process ◽  
Music Production ◽  
The Past ◽  
Scholarly Output ◽  
A Site

Over the past decade, there has been a steady increase of scholarly output examining the multidisciplinary, creative, and theoretical aspects of sound and music production in the recording studio and beyond (Zagorski-Thomas & Bourbon, 2020; Bennett & Bates, 2019; Hepworth- Sawyer, Hodgson, & Marrington, 2019; Thompson, 2019; Zagorski-Thomas, 2014; Frith & Zagorski-Thomas, 2012). Accordingly, a broad range of literature examines sound as a widespread cultural phenomenon (Papenburg & Schulze, 2016) and an essential source for pedagogical and ethnographic modeling in music technology education (Bell, 2018). Advances in technology make the “studio,” long viewed as a site of artistic and commercial production, available to a broader group of composers, musicians, and artists. Similarly, portable digital recorders afford sound artists and fi eld recordists an expansive range of choices to conduct soundscape research and creative practice. What emerges is a hybrid “composer- producer” identity and a studio’s function in the artistic process. This growth is the rise of an independent and transient practice in soundscape production among multidisciplinary composers and musicians. This article advocates for an updated notion of soundscape composition that integrates fi eld recordings, studio production, and collaboration from musicians representing a broad range of stylistic infl uences. Positioning the studio as a site of cultural production and creativity has implications for how soundscape production is taught to young composers. The author argues for a more inclusive, process-oriented view on both creativity and the places where musicians, composers, and producers work. The article includes a case study from the author’s recent album project, narrative analysis, concluding with a discussion on the pedagogical implications of independent soundscape production in education.

scholarly journals Public Investment, Government Indebtedness and Transitional Dynamics

2018 ◽  
Vol 10 (2) ◽  
pp. 121-150
Author(s):  
Constantine Angyridis ◽  
Panagiotis Tsintzos
Keyword(s):  
Growth Models ◽  
Public Investment ◽  
Income Taxation ◽  
Fiscal Rules ◽  
Aggregate Fluctuations ◽  
Endogenous Growth Model ◽  
The Government ◽  
Progressive Income Taxation ◽  
Unstable Dynamics

This paper considers an endogenous growth model with public capital and government debt. In setting the level of public investment each period, the government is assumed to follow two commonly used in the growth literature fiscal rules: public investment is either equal to a constant fraction of output or equal to a constant share of tax revenues. In our model, we allow revenues to be raised by the government through progressive income taxation and bonds issue. For both fiscal rules, we show that the potential occurrence of either indeterminacy or instability crucially depends on whether the government is a debtor or a creditor. In particular, government indebtedness causes the economy to be prone to either belief-driven aggregate fluctuations or unstable dynamics. This is a novel result in the related literature which has largely overlooked the role of public debt as a possible contributing factor to the presence of indeterminacy and instability in growth models.

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