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Peru has successfully pursued a market-driven financial de-dollarization during the last decade. Dollarization of credit and deposit of commercial banks - across all sectors and maturities - has declined, with larger declines for commercial credit and time and saving deposits. The analysis presented in this paper confirms that de-dollarization has been driven by macroeconomic stability, introduction of prudential policies to better reflect currency risk (such as the management of reserve requirements), and the development of the capital market in soles. Further de-dollarization efforts could focus on these three fronts. Given the now consolidated macroeconomic stability, greater exchange rate flexibility could foster de-dollarization; additional prudential measures could further discourage banks’ lending and funding in foreign currency; while further capital market development in domestic currency would help overall financial de-dollarization.

Dollarization --- Monetary policy --- Monetary management --- Economic policy --- Currency boards --- Money supply --- Banks and Banking --- Money and Monetary Policy --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary economics --- Banking --- Credit --- De-dollarization --- Currencies --- Money --- Banks and banking --- Peru

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This manual presents the Expenditure Assessment Tool (EAT), which helps assess expenditures for any specific country. EAT uses the commonly available software program Excel and has been designed by Expenditure Policy Division at Fiscal Affairs Department at IMF. The information EAT provides can be very useful in the evaluation of government spending and in the identification of areas where there may be room to increase spending efficiency or rationalize spending. The evaluation is done through benchmarking of spending—levels, composition and outcomes—against regional and income comparators. The focus is on both the economic and functional classification of expenditures. The application of the tool to spending in Argentina is presented as an illustration.

Education spending --- Education: Government Policy --- Expenditure --- Expenditures, Public --- Fiscal Policy --- Health care spending --- Health economics --- Health --- Health: General --- Health: Government Policy --- National Government Expenditures and Education --- National Government Expenditures and Health --- National Government Expenditures and Related Policies: General --- Public finance & taxation --- Public Finance --- Public Health --- Regulation --- Structure, Scope, and Performance of Government --- Total expenditures --- Argentina

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This paper discusses the short- and medium-term fiscal implications of government wage bill spending. Working with a sample of 137 advanced, emerging and low-income countries, we use a panel VAR approach to identify differences in the dynamic behavior of revenues, nonwage expenditures, and the overall fiscal balance in response to changes in the wage bill. We show that the interaction between wage bill changes and these three fiscal items is alike and varies overtime. Higher wage bill spending does not revert in the medium term, but the initial worsening of the fiscal balance associated with it, though it persists, eventually halves as revenues increase while non-wage spending remains broadly unchanged. We also show that countries differ in how these three fiscal variables behave following wage bill changes and seek to explain this variation by a set of country characteristics, including the level of development, access to natural resources and public indebtedness levels.

Econometric models. --- Wages --- Econometrics --- Mathematical models --- Labor --- Macroeconomics --- Public Finance --- Natural Resources --- Employment --- Unemployment --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Fiscal Policy --- National Government Expenditures and Related Policies: General --- Wages, Compensation, and Labor Costs: General --- Agricultural and Natural Resource Economics --- Environmental and Ecological Economics: General --- Labour --- income economics --- Public finance & taxation --- Environmental management --- Wage adjustments --- Expenditure --- Natural resources --- Fiscal stance --- Fiscal policy --- Environment --- Expenditures, Public --- Congo, Democratic Republic of the --- Income economics

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Using urban household surveys, we constructed a panel dataset to study the effects of the Argentine macroeconomic crisis of 1999-2002 with the aim of (1) identifying the most vulnerable households, (2) investigating whether employment in the public sector and government spending served to decrease vulnerability, and (3) understanding the mechanisms used by households to smooth the effects of the crisis. Households whose heads were male, less educated, and employed in the construction sector were more vulnerable to the crisis, experiencing larger-than-average declines in income and higher dispersion. Households whose heads were employed in the public sector were more protected from the crisis, although higher public spending did not serve to decrease their vulnerability. A significant source of vulnerability was linked to changes in employment status, and we studied the determinants of the probability of being unemployed and of becoming unemployed. Last, we found that households were unable to perfectly smooth income shocks. Given these results, there is room for broadening social safety nets, particularly in the form of public works programs.

Labor --- Macroeconomics --- National Government Expenditures and Welfare Programs --- General Welfare --- Personal Income, Wealth, and Their Distributions --- Labor Economics: General --- Aggregate Factor Income Distribution --- Wages, Compensation, and Labor Costs: General --- Unemployment: Models, Duration, Incidence, and Job Search --- Demand and Supply of Labor: General --- Labour --- income economics --- Personal income --- Income shocks --- Wages --- Unemployment --- National accounts --- Labor markets --- Income --- Labor economics --- Labor market --- Argentina --- Income economics

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Infrastructure bottlenecks have been identified as a key obstacle to growth affecting productivity and market efficiency, and hindering domestic integration and export performance. This paper assesses the state of Brazil’s infrastructure, in light of past investment trends and various quality and quantity indicators. Brazil’s infrastructure stock and its quality rank low in relation to that of comparator countries, chosen amongst main export competitors. We provide evidence that infrastructure affects domestic integration by analyzing price convergence of tradable goods across major cities. The government’s concession program will narrow part of the infrastructure gap, however, governance reforms will be crucial to improving investment efficiency.

Infrastructure (Economics) --- Transportation --- Public investments --- Government investments --- Investments, Public --- Expenditures, Public --- Investments --- Capital budget --- Economic development projects --- Investment of public funds --- Finance --- Exports and Imports --- Infrastructure --- Investments: General --- Public Finance --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- Economic History: Transport, Trade, Energy, Technology, and Other Services: Latin America --- Caribbean --- Multiple or Simultaneous Equation Models: Models with Panel Data --- Investment --- Capital --- Intangible Capital --- Capacity --- Industry Studies: Transportation and Utilities: General --- Trade: General --- Macroeconomics --- Public finance & taxation --- International economics --- Private investment --- Public investment spending --- Exports --- National accounts --- Expenditure --- International trade --- Saving and investment --- Brazil