Thejobsgenerated

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: appear to be the least constrained in terms of access to domestic and external financing. Borrowing costs. The financial burden of financing stimulus packages would be lower for countries with lower sovereign spreads. We focus on the average EMBI sovereign spread of LAC countries between 2007 and 2008. Figure 12 shows that Argentina, Venezuela and Ecuador display the largest sovereign spreads while investment grade countries such as Chile, Brazil and Mexico have smaller spreads.135 134 Fatas and Mihov (2003). We do not include measures of local borrowing costs as the papers issued by different countries vary considerably in terms of their maturity. However, thanks to extensive arbitrage between local and external bond markets, cross‐country differences in local borrowing costs are likely to be similar to those in external borrowing costs. 135 104 Annex 2: Figures and Tables Figure 1. Estimated Cost of Fiscal Discretionary Measures in 2009 (as % of GDP) Figure 2. Gross general government debt and primary balance in LAC region, 1990 ‐2008 (% of GDP ) 80 4.5 4.0 70 3.5 3.5 60 3.0 3.0 50 2.5 40 2.0 30 1.5 1.0 20 1.0 0.5 10 0.5 4.0 2.5 2.0 1.5 0.0 0.0 U str S ali a Sp ain Ja pa n Ch S. ina A ra bi a Ko re a Ru ss ia 1990 Au Ar U ge K nt in Ma ex Ge ico rm an Ca y na da Ita ly Br az il In di Fr a a I n nc do e ne sia 0 1994 1996 Government Debt 1998 2000 2002 Actual balance (rhs) 2004 2006 2008 Structural balance (rhs) Figure 4: Sensitivity of Fiscal Policies to the Economic Cycle in Latin America and the Caribbean Figure 3: LAC Revenues and Primary Spending (Percent of GDP) 32.0 1992 0.30 30.0 0.20 28.0 0.10 26.0 0.00 24.0 0.26 0.19 ‐0.10 0.24 0.15 0.03 -0.05 -0.08 -0.22 -0.27 -0.21 ‐0.20 22.0 -0.13 -0.15 ‐0.30 20.0 ‐0.40 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Revenues Primary Spending Expenditures : LAC7 Ciclycally Adjusted Primary Spending Expenditures : Res t of LAC Revenues : LAC7 Revenues : Res t of LAC Ciclycally Adjusted Revenues Endogenous discretionary policy 105 Primary Primary Balance: LAC7 Balance: Res t of LAC Automatic Stabilizers Figure 5. Aggregate index of lack of space for fiscal stimulus 1.0 Figure 6. Public Debt as % of GDP 70 (2005‐2008 Average) 60 0.8 50 0.6 40 0.4 30 0.2 20 0.0 10 Chile Brazil Colombia Peru Mexico Argentina Ecuador Venezuela Debt burden Primary deficits Financing constraints 0 Commodity dependence Expenditure rigidity Financing costs Argentina Figure 7: Primary Balance as % of GDP 9 8 Brazil Chile Colombia Ecuador Mexico Peru Venezuela Figure 8. Reduction of Central Government Revenues as a result of a 10% decline in commodity prices (% of GDP ) 3.0 (2005‐2008 Average) Bolivia 2.5 7 2.0 6 5 1.5 4 1.0 3 2 0.5 1 0.0 0 Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Peru Colombia Argentina Peru Chile Mexico Bolivia Ecuador Venezuela Peru Venezuela Figure 10. Capital raisings ‐ Private issues Figure 9. Central Government: Mandatory Spending 90% Brazil Venezuela 6 (% of total spending, average 2005‐2008 ) (% of GDP, 2005‐2008 Average ) 80% 5 70% 60% 4 50% 3 40% 30%...
View Full Document

Ask a homework question - tutors are online