TOPIC:

FISCAL POLICY
TANIA CABRERA HUAMAN​
MARY TRUJILLO EGUIZABAL
JORGE LIMA CONDORI​
JOYDEL SAMIR VELA VÁQUEZ

PROFESSOR :​
Lozán Cangalaya, Raúl Enrique
A country has two axes of interaction fo decisions in order to boost
economic activity.

ECONOMIC
POLICIES

MONETAR FISCAL
Y POLICY POLICY
 Fiscal policy
According Ministry of Economy and
Finance (MEF), Fiscal policy is the
set of changes in the government's
revenue and expenditure programs,
made in order to help achieve
macroeconomic policy objectives.
Through these variations, the
Government is thought to have a
powerful impact on aggregate demand
and, consequently, given a price level,
on output and employment.
 Public budget

It is an instrument of State management

for the achievement of results in favor
of the population, through the
presentation of services, achievement of
pre-established goals and objectives.
Sets spending limits during the fiscal
year, for each of the public sector
entities, and the income that finances
them, according to the availability of
public funds.
 1. Tax Income

Personal income tax

Three aspects
of the Social security tax

budget:
Tax on the income of legal entities

Indirect taxes
 2. Expenditures:

Three aspects Transfers

of the
budget: Purchases of goods and services

Debt interest
 3. Surplus or deficit:

Three aspects Budget surplus

of the
budget: Budget deficit

Balanced budget
 Effects of fiscal
policy

• Effects of fiscal policy on

employment and potential GDP
 Effects of fiscal
policy

• Effects of fiscal policy on

investment and savings
• Effect of a position on the
interest rate in the loanable funds
market
TYPES OF FISCAL POLICY

1. Expansive fiscal policy is

expansive when aggregate
demand increases.
TYPES OF FISCAL POLICY

2. Contractive fiscal policy is

one that reduces aggregate
demand
MACROECONOMIC IMPACTS OF COVID – 19
PERUVIAN CASE

 Economic growth ( PBI = C + I + G + X - M )

 Private Investment (I)

 Consumption (C)

 Production

 Expenditures (G)

 International Trade (X-M)

 Financial system instability

 Paralysis of the service sector

 Closure / bankruptcy of MYPES

 Unemployment

 Poverty
MINSA
FISCAL
DEFICIT
REVENUE EXPENDITURE
 MACROECONOMIC IMPACTS OF COVID – 19
PERUVIAN CASE

Measure to mitigate the

economic effects of the crisis
 Fiscal authorities
 Monetary authorities
Final objective:
Channel resources to households and families that require it, while
trying to maintain payment/value chains between companies.

 Expenditures

FISCAL TOOLS OF  Taxes

FISCAL
POLICY POLICY  Public investment

 Transferences

 Subsidy – Social progrmmes

Ministry of Economy and Finance  Public debt
(MEF)
INTERNATIONAL EVIDENCE
According to the World Bank, in the past, many Latin
American countries applied a pro-cyclical policy.
However, in view of the financial crisis in 2008, many
countries opted for a counter-cyclical policy, as is the
case with countries such as:

• Chile.
• Colombia.
• Costa Rica. • Guatemala.
• El Salvador. • Mexico.
• Paraguay.
• Peru.
MEXIC What about counter-cyclical fiscal policy in Mexico?
O
(April 6, 2020)
President Andres Manuel Lopez Obrador said the
federal government will continue with austerity
measures, reducing government spending and
promised that 2 million new jobs will be created in
the next nine months.
EXPANCIÓN, (2020).

On the other hand, Jorge Andrés Castañeda, analyst

and member of the Citizens' Advisory Council and
Gabriela Siller, director of economic-financial
analysis at Banco BASE; consider that the president
made a bad decision when contracting public
spending.
EXPANCIÓN, (2020).
ESTADOS
UNIDOS
(April 4, 2020)

U.S. stimulates its economy with

fiscal measures

• The United States has approved a US$

2.2 billion stimulus package.
• It is the largest stimulus plan in the
country's history and represents about
10% of the U.S. Gross Domestic Product
(GDP).
GESTIÓN, (2020).
CHILE
Fiscal measures

• The government has ensured fiscal resources for detection

and treatment of the virus.
• Health system measures
• Policy measures have been geared towards supporting
household incomes, especially for the most vulnerable, and
protecting employment.
• Income support measures for individuals and
households excluding tax and contribution changes
• Deferral of taxes and social security contributions and
bringing forward expenditures within current fiscal year
• Loan guarantees by the state benefiting private
borrowers
•OECD, (2020)
CHINA What’s in China’s policy arsenal to counter global recession?

BBVA analyses possible fiscal and monetary policy instruments in the face of the global economic
recession caused by the COVID-19.

 Tax cut and fee reduction. In the sectors influenced by COVID-19, such as restaurants, entertainment,

communication, retail sector and civil aviation

 Issuance of special government bond. (the last two times of issuance was in 1998 and 2007)

 Expand the issuance of local government bond. Special and local government bonus, there will be

around RMB 5 trillion scale of fiscal stimulus

 Support the new infrastructure investment

BBVA, (2020)
EUROPEAN UNION
European Union fiscal measures against coronavirus

Before March:
• The ECB's bond purchase plan
• The green light to states to spend by skipping the limits of the
Stability Pact
New line of defence against coronavirus
• Use the European rescue fund (ESM) to provide a credit line to
member states in need.
• Provide liquidity to cover health expenses also through the ESM
• The issue of coronabonos, bonds common to the entire Eurozone
to combat the economic recession that is causing the virus.
LA VANGUARDIA, (2020)
 INTERNATIONAL EVIDENCE
Evidence of the use of expansionary fiscal policy in many
countries:
 References
Banco Mundial. (12 de Octubre de 2017). Banco Mundial. Obtenido de Banco Mundial:
https://www.bancomundial.org/es/news/infographic/2017/10/12/politicas-prociclicas-politicas-contraciciclas
BBVA. (16 de Abril de 2020). BBVA Research. Obtenido de BBVA Research:
https://www.bbvaresearch.com/publicaciones/que-instrumentos-de-politica-fiscal-y-monetaria-tiene-china-en-
su-arsenal/

Expansión. (6 de Abril de 2020). Expansión. Obtenido de Expansión:

https://expansion.mx/economia/2020/04/06/politica-fiscal-contraciclica-mexico-preguntan-expertos

Fernández Díaz, A. P. (2006). Política Económica. España: McGRAW-HILL/INTERAMERICANADE ESPAÑA, S. A. U.

Obtenido de https://kupdf.net/download/politica-economica-fernandez-diaz-
4ed_58b1d7f46454a79810b1ea69_pdf%E2%80%8B

Gestión. (04 de Abril de 2020). Gestión. Obtenido de Gestión: https://gestion.pe/mundo/eeuu/eeuu-estimula-su-

economia-con-medidas-fiscales-o-dinero-helicoptero-coronavirus-covid-19-noticia/

Gestión. (17 de Mayo de 2020). Gestión. Obtenido de Gestión: https://gestion.pe/economia/luis-arias-minaya-el-

impacto-de-la-politica-fiscal-en-la-actividad-economica-de-abril-ha-sido-pequeno-noticia/
La Vanguardia. (23 de 03 de 2020). La Vanguardia. Obtenido de La Vanguardia:
https://www.lavanguardia.com/economia/20200323/4840708989/coronavirus-economia-medidas-fiscales-
crisis-ue.html
MEF. (2020). Ministerio de Economía y Finanzas. Obtenido de Ministerio de Economía y Finanzas:
https://www.mef.gob.pe/es/politica-economica-y-social-sp-2822/23-conceptos-basicos/62-concepto-basico
OECD. (s.f.). Organización para la Cooperación y el Desarrollo Económico. Recuperado el 08 de Junio de 2020, de
Organización para la Cooperación y el Desarrollo Económico: https://oecd.github.io/OECD-covid-action-
map/#Fiscalmeasure
THANK YOU!