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Towards Effective Social Insurance in Latin America: The Importance of Countercyclical Fiscal Policy

  • Miguel Braun

    (CIPPEC)

  • Luciano di Gresia

    (Universidad Nacional de La Plata)

Latin America is a volatile, crisis-prone region, with limited and inadequate social insurance. Therefore, the long-term as well as the recent poor suffer significantly during crises. Furthermore, social spending is procyclical in the region, but less so than total spending, indicating that the effectiveness of compensatory social policies designed to protect those vulnerable to crises is constrained by adjustments during recessions. The causes of procyclical fiscal policy lie in the political constraints on saving during expansions, combined with limited creditworthiness during recessions, and enhanced by economic volatility and a low share of automatic stabilizers in the budget.

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File URL: http://econwpa.repec.org/eps/pe/papers/0410/0410001.pdf
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Paper provided by EconWPA in its series Public Economics with number 0410001.

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Length: 62 pages
Date of creation: 05 Oct 2004
Date of revision:
Handle: RePEc:wpa:wuwppe:0410001
Note: Type of Document - pdf; pages: 62
Contact details of provider: Web page: http://econwpa.repec.org

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