TY - BOOK ID - 133957300 TI - Fix vs. Float: Evaluating the Transition to a Sustainable Equilibrium in Bolivia AU - Gonzalez, Andres. AU - Jafarov, Etibar. AU - Rodriguez Guzman, Diego. AU - Walker, Chris. PY - 2022 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Macroeconomics KW - Economics: General KW - Foreign Exchange KW - Public Finance KW - Optimization Techniques KW - Programming Models KW - Dynamic Analysis KW - Current Account Adjustment KW - Short-term Capital Movements KW - International Monetary Arrangements and Institutions KW - Open Economy Macroeconomics KW - Debt KW - Debt Management KW - Sovereign Debt KW - Fiscal Policy KW - Development Planning and Policy: Trade Policy KW - Factor Movement KW - Foreign Exchange Policy KW - Economic & financial crises & disasters KW - Economics of specific sectors KW - Currency KW - Foreign exchange KW - Public finance & taxation KW - Exchange rate arrangements KW - Conventional peg KW - Floating exchange rates KW - Government debt management KW - Public financial management (PFM) KW - Fiscal policy KW - Exchange rate flexibility KW - Currency crises KW - Informal sector KW - Economics KW - Debts, Public KW - Bolivia UR - https://www.unicat.be/uniCat?func=search&query=sysid:133957300 AB - Bolivia has achieved noteworthy success over the past 15 years in raising incomes, reducing poverty, and maintaining macroeconomic stability by deploying commodity revenues to finance transfers, public investment, and state-led development, using an exchange rate peg as a policy anchor. However, with the end of the commodity boom in 2014, fiscal deficits have grown and reserves have fallen. One route to restoring long-run sustainability would be to combine fiscal consolidation with a switch to a floating exchange rate. However, a preference for maintaining the peg could be accommodated with adjustments elsewhere in the policy framework. Employing a detailed dynamic stochastic general equilibrium model of the Bolivian economy, this study assesses the long-run sustainability and relative benefits of alternative policy combinations, and calculates optimal adjustment paths for the transition from the present situation to the steady state. It concludes that continued adherence to a fixed-rate regime, while not optimal, is feasible, if supported by a larger fiscal effort. ER -