Fiscal and monetary policy rules in Brazil: empirical evidence of monetary and fiscal dominance

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doi:10.18356/16840348-2021-135-4

Cited by 4 publications

(5 citation statements)

References 26 publications

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“…The response of both policies indicates that the variables vary over time, producing nonlinearities. To overcome this problem in the variables, several studies used different techniques employing the Markov Switching Model [33][34][35][36]. Therefore, this study uses the vector autoregressive (VAR) model with the Markov Switching Technique to measure the impact of such changes on the evolution of Jordan's economy.…”

Section: Methodsmentioning

confidence: 99%

Sustainability of Fiscal and Monetary Policies under Fixed Exchange Rate Regime in Jordan

Saleh,

Mdanat,

Alsoud

2023

Sustainability

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This study aims to analyze the sustainability of fiscal and monetary policies and the relationship between them under a fixed exchange regime that is characterized by high budget deficit and public debt in the past four decades. This study is critical for countries adopting a fixed exchange regime to achieve national priorities. Annual data from 1980 to 2020 were employed using Markov Switching Modelling to assess the sustainability of fiscal and monetary policies by identifying the main dimensions of fiscal and monetary policy that affect their sustainability. The findings show that fiscal policy is dominated by unsustainability, as the number of years of unsustainability was estimated to be more than four times the number of years in which it witnessed sustainability. Regarding monetary policy, sustainability was dominant, as it was found that the number of years of sustainability is about 1.3 times the number of years of unsustainability. Under a fixed exchange rate, there is no evidence confirming that there is sufficient coordination between fiscal and monetary policies. The study suggests that policymakers should follow complementary and balanced fiscal and monetary policies to achieve sustained economic growth.

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Section: Methodsmentioning

confidence: 99%

Sustainability of Fiscal and Monetary Policies under Fixed Exchange Rate Regime in Jordan

Saleh,

Mdanat,

Alsoud

2023

Sustainability

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“…Even prior to the pandemic, there were concerns about the sustainability of Brazil's debt and deficit levels. Moreira et al's (2021) findings suggest that fiscal policy had already become inconsistent with public debt sustainability by 2013. In such a case, expectations of future monetary accommodation can exert inflationary pressures today even if current monetary policy remains restrictive.…”

Section: Pandemic-induced Fiscal Pressuresmentioning

confidence: 99%

Monetary and Fiscal Policy Interactions and the Impact of the COVID-19 Pandemic

Burdekin,

Horan,

Tao

2024

IJFBS

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Although the onset of the pandemic pressured monetary and fiscal policy across the globe, deficit finance was aided by the large, established debt markets in countries like the United States. The expansionary efforts in emerging markets like Latin America put greater strains on their more limited capacity. Our study analyzes data from seven Latin American countries, three European countries, three Asian countries, and the United States. We utilize panel vector autoregressive (VAR) models to explore the dynamic interactions and feedback mechanisms among the policy variables, while accounting for unobserved country-specific effects. Our results demonstrate strong and significant interactions between monetary and fiscal policy around the time of the pandemic, with the primary causal effects running from fiscal to monetary policy. Additionally, our results yield evidence of countercyclical policy reactions to inflation for both monetary and fiscal policy over the pandemic period.

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“…There are numerous examples and case studies regarding the experience of fiscal policy rules in Latin American economies: Brazil (1995) (Moreira, Mendonca, and Sachsida 2021), Colombia (2000, 2011, Chile (2000), Mexico (2006), andNew Zealand (Grûnwald 2018).…”

Section: The Budget-surplus Fiscal Policy Rule and Policy Effectivenessmentioning

confidence: 99%

“…These rules, coordinated with the Central Bank, make a policy framework aimed at reducing output volatility and improving credit worthiness. Moreover, within a rational expectation framework, a monetary policy rule requires a fiscal policy rule (Favero and Monacelli 2005;Moreira, Mendonca, and Sachsida 2021).…”

Section: The Budget-surplus Fiscal Policy Rule and Policy Effectivenessmentioning

confidence: 99%

The Mundell‑Fleming Model and Macroeconomic Stabilization Policies

Betancourt,

Piasecki

2023

CER

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This paper analyzes the fiscal policy implications set in the Mundell‑Fleming (M‑F) model and its effectiveness in emerging economies. It also widens the scope of the policy mix with alternative exchange rates. The empirical evidence about the economies of Chile (1991–2003) and Colombia (1994–2004), about institutions, fiscal policy rule, and the eurozone conditions (1999), were considered relevant The paper has three sections a. The budget‑surplus fiscal policy rule and policy effectiveness, b. The role of institutions in setting policy rules, c. The experience of the Chilean and Colombian economies concerning fiscal policy rules within the M‑F framework. The main conclusion is that as long as country risk is lower due to countercyclical fiscal policy rules, governments have an alternative means of getting funds at a lower international interest rate. The fiscal policy effect on GDP (output)becomes positive.

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Fiscal and monetary policy rules in Brazil: empirical evidence of monetary and fiscal dominance

Cited by 4 publications

References 26 publications

Sustainability of Fiscal and Monetary Policies under Fixed Exchange Rate Regime in Jordan

Sustainability of Fiscal and Monetary Policies under Fixed Exchange Rate Regime in Jordan

Monetary and Fiscal Policy Interactions and the Impact of the COVID-19 Pandemic

The Mundell‑Fleming Model and Macroeconomic Stabilization Policies

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