In recent years, the global economic landscape has been marked by unprecedented upheavals, including the Global Financial Crisis, the disruptions caused by the COVID-19 pandemic, and, more recently, geopolitical tensions. These crises have tested the resilience of fiscal frameworks, highlighting the pressing need for greater adaptability to navigate unforeseen challenges … [Read more...] about New Index Helps Governments Design Better Escape Clauses to Bridge Fiscal Rigidity with Crisis Adaptability
Macroeconomics and Finance
How to Prevent Debt from Hurting Economic Growth
Three years after the onset of the COVID-19 pandemic, countries in Latin America and the Caribbean (LAC) are still dealing with its economic consequences. Currently, one of the main points of concern is the excessive level of public indebtedness and the risk it represents to economic stability and economic growth. This year the IDB published its flagship study … [Read more...] about How to Prevent Debt from Hurting Economic Growth
Complying with Fiscal Rules in Latin America and the Caribbean: From Promises to Action
Fiscal rules have become a common policy tool to promote the sustainability of public finances, as the number of countries with at least one fiscal rule has grown from ten in 1991 to more than 100 by 2021. Although fiscal rules promise to support fiscal discipline and maintain debt sustainability, their track record is often mixed, as simply adopting a fiscal rule does not … [Read more...] about Complying with Fiscal Rules in Latin America and the Caribbean: From Promises to Action
Are Latin American and Caribbean Countries Complying with Their Fiscal Rules?
Over the past two decades, a growing number of Latin American and Caribbean (LAC) countries began adopting fiscal rules to limit overspending influenced by election cycles, public pressure, and other political economy factors, helping the region strengthen its fiscal solvency and sustainability. However, in recent years the region has suffered several external shocks that … [Read more...] about Are Latin American and Caribbean Countries Complying with Their Fiscal Rules?
How Fiscal Rules Can Reduce Sovereign Debt Default Risk
The COVID crisis has generated an unprecedented fiscal response as the total resources assigned to attend the pandemic globally has reached $11 trillion, according to the World Economic Forum. Latin America and the Caribbean (LAC) has not been an exception. Taken together, the announced measures in LAC amount, on average[1], to 8 percent of the region’s GDP as stated by the … [Read more...] about How Fiscal Rules Can Reduce Sovereign Debt Default Risk