Description |
1 online resource (64 pages) : color illustrations |
Series |
IMF country report ; no. 16/235 |
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IMF country report ; no. 16/235.
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Contents |
The adjustment to commodity price shocks in Chile, Colombia and Peru -- Fiscal multipliers and institutions in Peru: getting the largest bang for the sol -- The missing link? exchange rate volatility and de-dollarization in Peru -- Selected issues in international taxation |
Summary |
This Selected Issues paper presents a comparative analysis of the macroeconomic adjustment in Chile, Colombia, and Peru to commodity terms-of-trade shocks. The study is done in two steps: (1) an analysis of the impulse responses of key macroeconomic variables to terms-of-trade shocks and (2) an event study of the adjustment to the recent decline in commodity prices. The experiences of these countries highlight the importance of flexible exchange rates to help with the adjustment to lower commodity prices, and staying vigilant in addressing depreciation pressures on inflation through tightening monetary policies. On the fiscal front, evidence shows that greater fiscal space, like that of Chile and Peru, gives more room for accommodating terms-of-trade shocks. -- With the end of the commodity super cycle, Peru's potential growth has declined, raising questions of what government policies could do to help boost growth, including over the medium term. This chapter shows that public investment multipliers have a larger effect on growth than current spending or tax-related stimulus in the short and medium terms. Peru's low debt and financial savings grants fiscal space for increasing investment spending, which could also entice and complement private investment, provided the former is efficient, fiscally sustainable and complemented by further reforms in public investment management and changes to the decentralization framework |
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High levels of dollarization may render corporations and individuals very exposed to exchange rate volatility. But, higher exchange rate volatility may reduce incentives of holding liabilities or assets in foreign currency, thus reducing overall dollarization in an economy and increasing the pass-through of monetary policy decisions to inflation and economic activity. This chapter studies the impact that higher volatility in the nominal bilateral exchange rate with respect to the U.S. dollar has on the speed of de-dollarization across a sample of 33 emerging market economies, spanning the period 1997-2015. It finds that, indeed, higher exchange rate volatility, after controlling for global and country-specific factors, speeds up de-dollarization. More exchange rate flexibility may be the last needed step to reduce dollarization in Peru to very low levels. -- International taxation issues have moved to the forefront of tax policy concerns, both in Peru and more globally, as aggressive cross-border tax planning by many multinational enterprises has given rise to significant public disquiet. The weaknesses of the international tax architecture need to be looked at carefully from the perspective of developing countries. This chapter examines some of Peru's more salient risks to base erosion and profit shifting--pricing of mining exports and intra-group debt servicing--pointing out strengths and vulnerabilities of the Peruvian tax system and recommending alternative approaches to address remaining challenges |
Notes |
"July 2016." |
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"June 3, 2016; approved by Western Hemisphere Department; prepared by M. Estevão, Z. Leal, F. Roch, S. Vtyurina (all WHD), G. Everaert (SPR), and R. Schatan (FAD)"--Page 2 of pdf |
Bibliography |
Includes bibliographical references |
Notes |
Description based on online resource; title from pdf title page (IMF.org website, viewed September 2, 2016) |
Subject |
International Monetary Fund -- Peru
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SUBJECT |
International Monetary Fund fast |
Subject |
Commodity exchanges -- Peru
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Economic development -- Peru -- Econometric models
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Fiscal policy -- Peru
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Foreign exchange rates -- Peru
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Dollarization -- Peru
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Taxation -- Peru
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Commodity exchanges
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Dollarization
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Economic development -- Econometric models
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Fiscal policy
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Foreign exchange rates
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Taxation
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Peru
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Form |
Electronic book
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Author |
Estevão, Marcello M., author, (IMF staff)
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Leal, Zulima, author.
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Roch, Francisco, author, (IMF staff)
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Vtyurina, Svetlana, author, (IMF staff)
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Everaert, G. (Greetje), author, (IMF staff)
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Schatan, R. (Roberto), author, (IMF staff)
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International Monetary Fund, publisher.
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International Monetary Fund. Western Hemisphere Department, sponsor.
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ISBN |
9781475582741 |
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1475582749 |
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