Volume 43, Number 168,
January-March 2012
Crisis and Economy Recovery: The Role of Fiscal Policy
Moritz Cruz and Javier Lapa

Argentina's case was similar to Russia's in that at the beginning of the crisis she declared her inability to continue serving internal and external public debt. This meant that more resources could be channeled into productive activity that stimulated aggregate demand, boosting economic growth. In this respect, although the fiscal deficit is maintained, it is considerably lower than the previous year, but public spending increases (see Table 6). This evidence suggests that fiscal policy autonomy is achieved in the midst of the crisis. With the exception of 2004, public spending for this year shows an increasing trend. As with Korea, the fiscal balance from 2004 is surplus, despite the sustained increase in public spending. In this respect, Argentina retains her fiscal policy autonomy during the process of economic recovery.

It is important to highlight that the increase in public spending apparent in Argentina, adhered mainly to the restructuring of its tax system, as is the case with Russia, which improved the efficiency of the tax collection service. New taxes were also implemented, to financial transactions, for example, and to exports, which meant that part of the windfall exporters gained from the devaluation could be captured. Both taxes together, represented 2.7% of gdp, which explains almost entirely the primary fiscal surplus in 2004. In summary, the surpluses discussed are related more to improved revenue collection than to reductions in spending. Added to this is the income gained from the good performance of raw material prices on the international market.

The Argentine government also made solving the problem of unemployment and reducing poverty a priority. For this reason social spending was a significant proportion of total spending. 16

In summary, Brazil, Korea, Russia and Argentina were the economies that achieved rapid and sustained post-crisis economic growth by prioritizing the real reactivation of their economies in the taxation sector, using public spending as a means of boosting aggregate demand and supply.

16 For example, one of the main programs aimed at alleviating these problems was income support for unemployed heads of households. This benefitted 20% of total households, 97.6% of which were beneath the poverty line.

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Published in Mexico, 2012-2018 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
CP 04510, México, D.F. Tel (52 55) 56 23 01 05 and (52 55) 56 24 23 39, fax (52 55) 56 23 00 97, www.probdes.iiec.unam.mx, revprode@unam.mx. Journal Editor: Moritz Cruz. Reservation of rights to exclusive use of the title: 04-2012-070613560300-203, ISSN: pending. Person responsible for the latest update of this issue: Minerva García, Circuito Maestro Mario de la Cueva s/n, Ciudad Universitaria, Coyoacán, CP 04510, México D.F., latest update: August 29th, 2018.
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