Copenhagen Consensus Latin America: Fiscal Problems
By Miguel Braun
The working paper used by the Expert Panel is available for download here, the finalized paper has been published in the Latin American Development Priorities: Cost and Benefits book by Cambridge University Press.
Despite recent improvements in fiscal solvency, Latin America still faces serious challenges in this area. Structural balance estimates show that the region is still vulnerable to adverse shocks, and could benefit from reforms to improve solvency, reduce procyclicality and improve efficiency and equity of public spending and taxes. In this paper the author proposes and attempts to quantify the impact of reforms based on recent economic literature. The proposals include improving debt management by using contingent debt instruments, improving solvency and reducing procyclicality by implementing effective fiscal rules, creating a regional policy evaluation office and reforming tax systems to eliminate distortionary taxes and replace corporation taxes with personal income taxes.