The macroeconomic effects of fiscal consolidation in Latin America and the Caribbean

The new IMF Regional Economic Outlook finds that “fiscal multipliers in the region are estimated to lie between 0.5 and 1.1–suggesting that consolidation will be more contractionary than previously thought. Nevertheless, these estimates are small enough to suggest that consolidations will improve the region’s debt dynamics, even in the short run. Since expenditure multipliers vary according to the type of instrument used, consolidation plans should preserve public investment to support growth and employment.”

Posted by at 2:33 PM

Labels: Inclusive Growth


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