Riding the Roller Coaster

This paper analyzes recent fiscal policies of nonrenewable resource exporting countries in Latin America and the Caribbean in the context of sharp swings in resource prices. Fiscal policies were predominantly procyclical during the boom period 2003-08 but to significantly differing degrees within the sample. Countries that pursued more conservative fiscal policies during the boom were then able to implement countercyclical fiscal policies during the downturn; moreover, they reduced or maintained their fiscal vulnerability to resource shocks, while their long-term fiscal sustainability positions improved or were broadly unchanged. However, these dimensions of fiscal policy did not seem to be linked to fiscal rules or resource funds, as countries with such institutions displayed a broad range of fiscal responses to the recent cycle.Oil producing countries;Commodity price fluctuations;External shocks;Fiscal sustainability;Latin America;Natural resources;Oil exporting countries;Consumption;fiscal policy, fiscal rules, expenditure, fiscal policies, fiscal vulnerability, fiscal stance, fiscal rule, long-term fiscal sustainability, expenditures, fiscal impulses, fiscal impulse, fiscal revenue, public debt, primary expenditure, fiscal framework, public spending, fiscal positions, fiscal transparency, expenditure growth, expansionary fiscal, capital expenditure, fiscal impact, fiscal management, fiscal balance, fiscal deficits, fiscal responsibility, fiscal response, government expenditure, government spending, budget systems, public financial management, fiscal policy response, expansionary fiscal policies, structural fiscal, fiscal balances, fiscal resource, budget rigidities, fiscal policy responses, fiscal affairs department, fiscal exposure, government expenditures, fiscal policy frameworks, fiscal stimulus, fiscal position, fiscal accounting, fiscal discipline, budget balance, fiscal affairs, fiscal spending, fiscal surpluses, fiscal powers, tax reductions, fiscal deficit, fiscal vulnerabilities, fiscal performance, expansionary fiscal policy, fiscal responsibility law, fiscal policy formulation, fiscal institutions, budget law, annual budget, national budget, general government expenditure, fiscal adjustment, fiscal outcomes, intergovernmental transfers, budgetary rules, fiscal policy rules, fiscal risks, tax reduction, tax base, fiscal revenues, medium-term expenditure framework, medium-term expenditure, fiscal costs, subnational spending, fiscal policy framework, budget balances, budget revenues, fiscal flexibility, tax structure, fiscal policy process, fiscal adjustments, public finances, fiscal regime, fiscal projections, fiscal regimes, budget process, prudent fiscal policies, tax policy, fiscal analysis, annual budgets, fiscal support, fiscal sustainability analysis, expenditure framework, fiscal accounts, expenditure envelope, primary deficit, taxation, level of expenditures, fiscal reforms