Monetary and fiscal policy interactions in Brazil: an application of the fiscal theory of the price level

• Autor(a) principal: Fialho, Marcelo Ladeira
• Data de Publicação: 2005
• Outros Autores: Portugal, Marcelo Savino
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Estudos Econômicos (São Paulo)
• Texto Completo: https://www.revistas.usp.br/ee/article/view/35856
• topic: teoria fiscal do nível de preços; VAR; MS-VAR; política monetária; política fiscal; fiscal theory of the price level; VAR; MS-VAR; monetary policy; fiscal policy

The aim of the present paper is to verify the predominance of a monetary or fiscal dominance regime in Brazil in the post-Real period. The analysis is based on a model proposed by Canzoneri, Cumby and Diba (2000). This model proposes that there is a relationship between the public debt/GDP and primary surplus/GDP series by using the vector autoregression (VAR) framework and analyzing the impulse response functions. Another aim is the extension of the article written by Muscatelli et al. (2002) about the interactions between monetary and fiscal policies using the Markov-switching vector autoregressive model (MS-VAR) introduced by Krolzig (1997), since the relationship between these policies may not be constant over time. In conclusion, the macroeconomic coordination between monetary and fiscal policies in Brazil was virtually a substitute policy throughout the study period, with a predominantly monetary regime, in opposition to the non-Ricardian policies of the Fiscal Theory of The Price Level.