Helping Governments to Make Fiscal Policy More Equitable with LAPEF

The Laboratory of Policies for Fiscal Equity (LAPEF) aims to help Latin American and Caribbean governments design and implement more equitable fiscal policies. Traditionally focused on efficiency and growth, fiscal policy in the region has struggled with structural inequality and limited redistributive capacity. LAPEF addresses this gap by offering tools and microsimulation models that assess the impact of tax and spending reforms on household income, poverty, and inequality. These models use household surveys, fiscal legislation, and administrative data to simulate policy outcomes before implementation. LAPEF promotes a holistic approach that integrates equity, efficiency, and sustainability. It enables governments to identify winners and losers of fiscal reforms, design compensation mechanisms, and reduce work disincentives. Key tools include country-specific incidence analysis, personalized VAT simulations, and a fiscal intelligence ecosystem for targeted interventions. LAPEF also supports the creation of fiscal equity institutions within ministries of finance to ensure long-term policy effectiveness. By grounding decisions in real-world data and robust institutions, LAPEF empowers governments to build fairer, more inclusive economies. The Inter-American Development Bank invites fiscal leaders to collaborate and leverage LAPEFs methodologies to advance equitable fiscal policy across the region.