Pro-cyclical fiscal policy in Brazil: long- and short-term relationships using cointegration and error correction model (2005-2015) Online publication date: Fri, 21-Jul-2017
by Ricardo Ramalhete Moreira
International Journal of Economic Policy in Emerging Economies (IJEPEE), Vol. 10, No. 2, 2017
Abstract: This article analyses the nature of the fiscal rule in Brazil, during the period from January 2005 to April 2015, by using a VEC model. The main findings indicate that Brazil's fiscal policy is a pro-cyclical one regarding public debt and inflation, thus contributing to understand why the public debt/GDP ratio presents a unit root over the last years. Moreover, it means that fiscal reactions were not consistent with the inflation targeting regime in Brazil.
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