Fiscal Stimulus, Fiscal Policies, and Financial Instability

Fiscal policies have been limited and without a capacity to generate employment as a result of the processes of financial deregulation and liberalization prior to the Global International Financial Crisis (GIFC). During the Post-crisis period, budgets were limited to face the onerous payments of the external debt service. As austerity policies deepened and job creation was set aside in order to meet the reduction in the fiscal deficit, the economy remained stable but financial instability deepened. COVID-19 highlighted the deficiencies in social spending, especially the health sector, and the lack of complementarity between monetary policy and fiscal policy in Latin American countries.