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dc.titleFiscal Rules and Public Investment: The Case of Peru, 2000-2019
dc.contributor.authorMendoza Bellido, Waldo
dc.contributor.authorVega, Marco
dc.contributor.authorRojas, Carlos I.
dc.contributor.authorAnastacio, Yuliño
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coveragePeru
dc.date.available2021-01-28T00:00:00
dc.date.issue2021-01-28T00:00:00
dc.description.abstractThis article has three goals. First, it describes the genesis of fiscal rules in Peru and its degree of compliance. Second, it estimates the effect of fiscal rules adoption on public investment. Last, it analyzes the impact of alternative fiscal rules on public investment and public debt sustainability. Our main results are as follows. First, the implementation of fiscal rules in the year 2000 caused a 60 to 80 percent fall in public investment relative to several counterfactuals. Second, our DSGE model suggests a Structural Fiscal Rule would have increased the consumers welfare in the period 2000-2019 more than other fiscal designs. This rule reduces the procyclicality of public investment under commodity price shocks and macroeconomic volatility under world interest rate shocks. Third, a Structural Fiscal Rule has the lowest probability of exceeding the current public debt limit (30 percent of GDP), although there is a trade-off between investment-friendly rules and fiscal sustainability issues. Nevertheless, our quantitative results are limited to short spans of analysis. With a long-run perspective, we may say that fiscal rulesdespite constant modifications and recurring non-compliancehave fulfilled their original and most important goal of achieving the consolidation of public finances.
dc.format.extent89
dc.identifier.doihttp://dx.doi.org/10.18235/0003018
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Fiscal-Rules-and-Public-Investment-The-Case-of-Peru-2000-2019.pdf
dc.language.isoen
dc.mediumAdobe PDF
dc.publisherInter-American Development Bank
dc.subjectFiscal Policy
dc.subjectPublic Investment
dc.subjectTax Revenue
dc.subjectPublic Debt
dc.subjectFiscal Sustainability
dc.subjectFiscal Deficit
dc.subjectFiscal Rule
dc.subjectGross Domestic Product
dc.subject.jelcodeH54 - Infrastructures • Other Public Investment and Capital Stock
dc.subject.jelcodeE62 - Fiscal Policy
dc.subject.jelcodeH60 - National Budget, Deficit, and Debt: General
dc.subject.jelcodeH50 - National Government Expenditures and Related Policies: General
dc.subject.jelcodeH68 - Forecasts of Budgets, Deficits, and Debt
dc.subject.keywordspublic investment;Fiscal Rules;fiscal sustainability
dc.typeWorking Papers
idb.identifier.pubnumberIDB-WP-01186
idb.operationRG-K1198
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