{"product_id":"budget-rigidity-in-latin-america-santiago-herrera-9781464815201","title":"Budget Rigidity in Latin America and the Caribbean: Causes, Consequences, and Policy Implications","description":"\u003cp\u003ePolicy makers in Latin America and the Caribbean (LAC) often complain that poor fiscal performance in their countries is a result of a high degree of spending rigidity. Despite being a common complaint, the issue has remained largely ignored by the literature because of the lack of adequate measures of rigidity that allow cross-country and time series comparability. This report helps close this gap by introducing a new measure of spending rigidities that can be easily applied to multiple countries. It focuses on the categories of spending that are naturally inflexible--wages, pensions, transfers to subnational governments, and debt service--and separates them into two components: structural and nonstructural.\u003cbr\u003e \u003cbr\u003e The structural component is determined by economic, demographic, and institutional fundamentals. The nonstructural component is determined by short-run transitory factors associated with business and political cycles. The degree of rigidity of spending is then proxied by the ratio of structural spending to total spending, with a higher value indicating that spending is driven mostly by factors out of the policy makers' control.\u003cbr\u003e \u003cbr\u003e This concept of rigidity was applied to 120 countries for the years 2000+\"17 and produced several interesting results: \u003cbr\u003e - Advanced economies and developing countries in other regions have higher levels of rigidity than countries in LAC.\u003cbr\u003e - The sources of rigidity vary by country.\u003cbr\u003e - Higher rigidity is associated with higher spending levels, higher tax rates, higher public debt, and lower efficiency of public spending.\u003cbr\u003e - Rigidity has pervasive effects on fiscal sustainability, increasing the country's financing needs and reducing the probability of the country starting a fiscal adjustment.\u003cbr\u003e \u003cbr\u003e Given these pervasive effects of spending rigidity, the report concludes by discussing several policies to contain the sources of rigidity in the long term, ranging from the importance of deepening the pension reform process to the need of establishing strong fiscal institutions promoting medium-term fiscal planning.\u003c\/p\u003e\u003cbr\u003e\u003cbr\u003e\u003cb\u003eAuthor:\u003c\/b\u003e Santiago Herrera, Eduardo Olaberria\u003cbr\u003e\u003cb\u003eISBN-10:\u003c\/b\u003e 1464815208\u003cbr\u003e\u003cb\u003eISBN-13:\u003c\/b\u003e 9781464815201\u003cbr\u003e\u003cb\u003ePublisher:\u003c\/b\u003e World Bank Publications\u003cbr\u003e\u003cb\u003eLanguage:\u003c\/b\u003e English\u003cbr\u003e\u003cb\u003ePublished:\u003c\/b\u003e 04\/27\/2020\u003cbr\u003e\u003cb\u003ePages:\u003c\/b\u003e 70\u003cbr\u003e\u003cb\u003eFormat:\u003c\/b\u003e Paperback\u003cbr\u003e\u003cb\u003eWeight:\u003c\/b\u003e 0.41lbs\u003cbr\u003e\u003cb\u003eSize:\u003c\/b\u003e 11.00h x 8.50w x 0.15d","brand":"Santiago Herrera","offers":[{"title":"Paperback","offer_id":43941209866495,"sku":"9781464815201","price":35.0,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0662\/2982\/9887\/products\/img_fccb0d50-9320-40c5-b547-e589e9d720f4.jpg?v=1681451567","url":"https:\/\/www.whiterainbookhouse.com\/products\/budget-rigidity-in-latin-america-santiago-herrera-9781464815201","provider":"WR Book House","version":"1.0","type":"link"}