Guillermo E. Perry, Luis Servén, and Rodrigo Suescún (eds.). Fiscal Policy, Stabilisation, and Growth: Prudence or Abstinence? Washington, D.C: The World Bank. 2008. Paperback. 329 Pages. Price not Given.

‘Fiscal Policy, Stablisation, and Growth’ edited by GuillermoPerry, is an excellent volume covering the typical but current debate on“Does Fiscal Policy Matters”. The book highlights the procyclical andanti-investment biases embedded in fiscal policies, explores theircauses and macroeconomic consequences. The text provides empiricalsubstance to the theoretical models and offers policy andrecommendations, to help overcome the procyclicality and anti-investmentbiases of fiscal policies adopted thereof. With wide range of technicaland empirical discussions, political economy aspects of the budgets havealso been examined. Though the focus of the book is Latin American andthe Caribbean countries, the debate is so holistic that it can be usedfor policy recommendations else where as well. The book is organised intwo parts; the first part, spread over four chapters, covers theprocyclicality of Fiscal policy while the Part II, comprised of fivechapters, elucidates the impact of fiscal policy on economic growth. Thediscourse takes into account the fiscal policy solvency condition andits imbedded biases towards certain policy options. Chapter 1 providesan excellent overview of what is discussed in the volume. The bookargues that excessive focus of fiscal agents on short term indicators offiscal health, namely the government debt or cash flows, may detractattention from tracking the intertemporal solvency. Such detraction willaffect the macroeconomic stability and long-term growth, argues thebook. Perverse incentives, that have political economy context, are atthe root of flawed policies such as procyclical policies, contends thebook.