Política y Sostentabilidad Fiscal en tiempos de Covid-19: El Caso de Chile

Cordero, Alvaro and Villena, Mauricio (2020): Política y Sostentabilidad Fiscal en tiempos de Covid-19: El Caso de Chile.

Abstract

The fiscal stimulus initially proposed by the Chilean government to support COVID-19 measures contemplates US$ 17.105 billion and corresponds to 6.9% of GDP. This paper seeks to contribute to the discussion on fiscal policy in times of pandemic by analyzing the country's fiscal measures to address COVID-19 and comparing them with those applied by other countries, and with those used to address the 2009 subprime financial crisis. It also discusses what measures could complement the government's Emergency Plan. The second part of the paper presents a discussion of the evolution of the central government's finances (as a percentage of GDP) from 1990 to 2019. Together with this, the ex post calculation of vulnerability and fiscal sustainability indicators adapted to the Chilean fiscal reality is discussed. In particular, we estimate the following Sustainability indicators: (I) Gross Debt / GDP (Chilean experience and a comparative analysis with countries with a GDP per capita similar to the national one, and emerging countries with a reputation of solid fiscal positions); (II) Net Debt / GDP; (III) Debt Service; (IV) Acid Test for Debt Service; (V) Primary Balance (IMF methodology); (VI) Adapted Sustainable Primary Balance and (VII) Macro-Adjusted Primary Balance.

• Item Type: MPRA Paper
• English Title: Fiscal Policy in Covid-19 Times: The Case of Chile
• Language: Spanish
• Keywords: Public Finances, Macroeconomics, Public Debt, Fiscal Sustainability, COVID-19, Chile.
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; H - Public Economics > H6 - National Budget, Deficit, and Debt > H60 - General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O23 - Fiscal and Monetary Policy in Development

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