DIA 2016: Chapter 8: A Better Way For Government To Save (Tables and Figures)
Cavallo, Eduardo A.
Increasing national saving requires everyone to pitch in, including the government. Traditionally, policies to boost public saving have focused on either raising taxes or cutting spending—or both. However, in Latin America and the Caribbean today, that two-pronged strategy is largely a non-starter. Plummeting commodity prices, rising interest rates, and a prolonged global recession have translated into deteriorating fiscal and external accounts and low, or no, growth for much of the region. To ask people and firms to contribute more in taxes and receive less in public services would be salt in the wounds of these failing economies. There are, however, other ways for government to save. Essentially, the idea is for government to spend better in order to save more.