Title: Pro-cyclical fiscal policy in Brazil: long- and short-term relationships using cointegration and error correction model (2005-2015)

Authors: Ricardo Ramalhete Moreira

Addresses: Department of Economics, Federal University of Espírito Santo, Vitória, Espírito Santo, Brazil

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.

Keywords: public debt/GPP ratio; fiscal rule; inflation; Brazil.

DOI: 10.1504/IJEPEE.2017.085287

International Journal of Economic Policy in Emerging Economies, 2017 Vol.10 No.2, pp.171 - 184

Available online: 03 Jul 2017 *

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