The financial fragility hypothesis applied to the public sector: an analysis for Brazil's economy from 2000 to 2008

Filho, Fernando Ferrari; Terra, Fábio Henrique Bittes; Conceição, Octavio Augusto Camargo

doi:10.2753/pke0160-3477330108

Cited by 16 publications

(27 citation statements)

References 2 publications

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“…Even though Minsky preferred the term 'financial instability' instead of 'financial fragility' in the original version of the hypothesis (Minsky, 1982), Ferrari-Filho et al (2010), one of our reference articles, used the word 'fragility' when adapting this hypothesis to public finance, therefore, we follow their tradition as well.…”

Section: Conceptual Backgroundmentioning

confidence: 99%

Testing Minsky’s Financial Fragility Hypothesis for Turkey’s Public Finances

Can¹,

Canöz²

2020

PFQ

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This paper gauges the degree of fiscal vulnerability in Turkey from a Minskian perspective. Succinctly speaking, Minsky’s financial stability hypothesis states that the government should apply hedge financing at least sporadically and pursue countercyclical fiscal policies to restore stability. We calculated two fiscal fragility indices based on Minsky’s hypothesis to examine the recent trends in Turkish public finances. According to our findings, Turkish fiscal balances are in a deteriorating trend and heading towards (ultra)Ponzi financing which is evidenced by the plummeting values of the fiscal fragility index. The results are suggestive that currently the fiscal performance in Turkey is waning gradually and current fiscal posture is not on a par with past years. Worsening fiscal balances emit a signal for a looming fiscal crisis and it is evident that this trend should promptly be reversed by the aid of appropriate expedients. Quitting the use of procyclical fiscal policies, building up public confidence by primary balance generation, implementing full-fledged tax reform, restructuring contingent liabilities, proper scrutiny of expenditures, reducing profligacy are among the policy options available for the government. Notwithstanding the abundance of alternative fiscal policies, the current Covid-19 pandemic is quite a hindrance to attaining intended outcomes regarding fiscal stability.

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Section: Conceptual Backgroundmentioning

confidence: 99%

Testing Minsky’s Financial Fragility Hypothesis for Turkey’s Public Finances

Can¹,

Canöz²

2020

PFQ

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“…Another study that deserves attention is the work of Ferrari-Filho, Terra and Conceição (Ferrari-Filho et al, 2010), which examines the public sector of the Brazilian economy from 2000 to 2007. To begin with, they point out that, despite the fact that in his work Minsky relies on the financial behavior of firms, the theoretical basis of his research can be used to analyze the problems of the public sector.…”

Section: Empirical Analysis Of the Public Sector On The Base Of The Ffhmentioning

confidence: 99%

The financial fragility hypothesis and the debt crisis in Italy in the 2010s

Ivan

Rodionova

2021

Terra Econ.

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The paper attempts to analyze the characteristics of current debt crisis in Italy based on the financial fragility hypothesis developed by Hyman Philip Minsky. Our main suggestion is that in the private sector of the Italian economy after the 2011 crisis fragile types of financing prevailed over hedge types. We test it using the 2013-2017 data for 163 Italian private non-financial companies. Based on the data obtained, authors constructed indices according to three methodologies that distinguish firms as hedge, speculative and Ponzi, in order to determine the degree of financial fragility of the private sector of the Italian economy. The results showed that the economy of Italy in 2013-2017 remains financially fragile, despite the increase in the share of hedge companies. This outcome implies that austerity measures are not good "remedy" for this economy. Such policies diminish economic activity, in general, and flow of business profits, in particular. It creates difficulties to escape from fragile financial position.

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“…No entanto, não foram identifi cados estudos que utilizassem modelos econométricos formais para, simultaneamente, derivar um índice de fragilidade do setor público e verifi car sua relação com os agregados macroeconômicos. Ferrari-Filho et al (2010), Terra e Ferrari-Filho (2011; 2017) e Moura e Tiryaki (2016) desenvolveram trabalhos que se assemelham à iniciativa proposta no presente artigo. Ferrari-Filho et al (2010) e Terra e Ferrari-Filho (2011; 2017) calcularam um índice de fragilidade fi nanceira do setor público a partir de valores contemporâneos de variáveis de fl uxo das fi nanças públicas.…”

Section: Introductionunclassified

“…Ferrari-Filho et al (2010), Terra e Ferrari-Filho (2011; 2017) e Moura e Tiryaki (2016) desenvolveram trabalhos que se assemelham à iniciativa proposta no presente artigo. Ferrari-Filho et al (2010) e Terra e Ferrari-Filho (2011; 2017) calcularam um índice de fragilidade fi nanceira do setor público a partir de valores contemporâneos de variáveis de fl uxo das fi nanças públicas. Esses autores analisaram o comportamento das fi nanças públicas com base na taxonomia apresentada por Minsky (1986) e não utilizaram análise econométrica para derivar o indicador de fragilidade fi scal ou para analisar seu comportamento cíclico.…”

Section: Introductionunclassified

Fragilidade fiscal e os ciclos econômicos no Brasil pós-Plano Real: evidências de um modelo de fator dinâmico associado à análise VAR

2020

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Resumo Iniciativas de política fiscal são comumente indicadas para amenizar as flutuações na atividade econômica, particularmente durante recessões severas, quando a política monetária torna-se menos eficaz. No entanto, a evidência empírica em países emergentes mostra que os gastos públicos exibem frequentemente um comportamento pró-cíclico e os desequilíbrios fiscais podem desencadear crises econômicas. Este trabalho tem por objetivo utilizar o modelo de fator dinâmico para construir um índice de fragilidade fiscal que permita analisar o comportamento cíclico da política fiscal no Brasil por meio de modelos de vetores autorregressivos (VAR). Utilizando dados mensais entre 1996 e 2019, a análise empírica verificou se as finanças públicas no Brasil se deterioram durante expansões na atividade econômica. Os resultados indicam que choques exógenos na produção aparentam reduzir a fragilidade fiscal e outros fatores que promovem a instabilidade macroeconômica contribuem para a deterioração das finanças públicas, como uma maior volatilidade cambial.

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The financial fragility hypothesis applied to the public sector: an analysis for Brazil's economy from 2000 to 2008

Cited by 16 publications

References 2 publications

Testing Minsky’s Financial Fragility Hypothesis for Turkey’s Public Finances

Testing Minsky’s Financial Fragility Hypothesis for Turkey’s Public Finances

The financial fragility hypothesis and the debt crisis in Italy in the 2010s

Fragilidade fiscal e os ciclos econômicos no Brasil pós-Plano Real: evidências de um modelo de fator dinâmico associado à análise VAR

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