Discipline, Stability, and Sustainability in Venezuelan Public Finance

Authors

  • Luis Zambrano Sequín Universidad Católica Andrés Bello. Instituto de Investigaciones Económicas y Sociales
  • María Antonia Moreno Universidad Católica Andrés Bello. Instituto de Investigaciones Económicas y Sociales
  • Santiago Sosa

DOI:

https://doi.org/10.35588/pp.v13i2.4655

Keywords:

Fiscal rules, Fiscal policy, Public finance

Abstract

The objective of the proposal of a system of fiscal rules for Venezuela is twofold: to achieve the stabilization and sustainability of public finances, and to provide foundations for policies aimed at restoring the country’s basic macroeconomic balances and a sustained growth path. Before presenting such system, we offer an overview of the current state of the subject on fiscal rules and – being Venezuela an oil country – focus on their main aspects and restrictions in natural resource economies. To evaluate the proposed system of fiscal rules, we calibrate and simulate a tailored model for the Venezuelan case and perform the estimations in the context of likely short and medium-term macroeconomic scenarios. The results of the exercise allow us to infer its feasibility and convenience if the fiscal rules proposed are implemented after a process of fiscal consolidation and restoration of basic macroeconomic equilibria.

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Published

2020-12-31

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