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Impact of external debt and other macroeconomic policies on output in Brazil: a var approach

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Author Info
Yu Hsing () (Southeastern Louisiana University)

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Abstract

This paper uses a VAR model to quantify the relative importance of external debt, exchange rates, monetary policy and other selected variables when explaining output fluctuations in Brazil. Using the money market rate as a policy instrument, impulse response functions indicate that shocks to the interest rate, the external debt, or the inflation rate have an inverse impact on output, while currency and stock prices shocks have a positive effect on economic activity. In the medium run, the explanatory power of the external debt rises while that of the money market rate and the real exchange rate decline. When money is considered as a monetary tool, output responds positively to shocks to the real monetary base or to stock prices and reacts inversely to shocks to the external debt, currency depreciation, or inflation. Therefore, the choice of different monetary policy tools is not neutral when affecting output.

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Publisher Info
Article provided by Ilades-Georgetown University, Economics Department in its journal Revista de Analisis Economico.

Volume (Year): 18 (2003)
Issue (Month): 2 (December)
Pages: 97-108
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Handle: RePEc:ila:anaeco:v:18:y:2003:i:2:p:97-108

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Related research
Keywords: Var model; external debt; exchange rates; monetary policy;

Find related papers by JEL classification:
E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
H6 - Public Economics - - National Budget, Deficit, and Debt

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Bevilaqua, Afonso S & Garcia, Marcio G P, 2002. "Debt Management in Brazil: Evaluation of the Real Plan and Challenges Ahead," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 7(1), pages 15-35, January. [Downloadable!] (restricted)
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  2. João R. Faria & Francisco Galrão Carneiro, 2001. "Does High Inflation Affect Growth in the Long and Short Run?," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 89-105, May. [Downloadable!]
  3. Shaghil Ahmed, 1999. "Sources of economic fluctuations in Latin America and implications for choice of exchange rate regimes," International Finance Discussion Papers 656, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  4. Carneiro, Francisco Galrao & Divino, Jose Angelo C A & Rocha, Carlos H, 2002. "Revisiting the Fisher Hypothesis for the Cases of Argentina, Brazil and Mexico," Applied Economics Letters, Taylor and Francis Journals, vol. 9(2), pages 95-98, February. [Downloadable!] (restricted)
  5. Hamilton, James D, 1989. "A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle," Econometrica, Econometric Society, vol. 57(2), pages 357-84, March. [Downloadable!] (restricted)
  6. Hoffmaister, Alexander W. & Roldos, Jorge E., 2001. "The Sources of Macroeconomic Fluctuations in Developing Countries: Brazil and Korea," Journal of Macroeconomics, Elsevier, vol. 23(2), pages 213-239, April. [Downloadable!] (restricted)
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  7. Soydemir, Gokce A, 2002. "The Impact of the Movements in US Three-Month Treasury Bill Yields on the Equity Markets in Latin America," Applied Financial Economics, Taylor and Francis Journals, vol. 12(2), pages 77-84, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. HSING, Yu, 2004. "Response of Venezuelan output to monetary policy, deficit spending, and currency depreciation: a VAR model," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO - FACULTAD DE ECONOMÍA. [Downloadable!]
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