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Brazilian economy in the 2000’s: A tale of two recessions

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  • Matheus Cardoso Leal
  • Marcio Issao Nakane

Abstract

With the implementation of counter-cyclical economic policies, Brazil was less affected by the 2008 Great Recession than the average for the rest of the world, with an average annual growth of 4.11% between 2008 and 2011, compared to 3.25% for this group for the same period. This meant that the country ended the 2000s with an average annual growth of 3.91% between 2002 and 2010, above the 2.69% seen in the average of its Latin American peers. Despite this, the worsening of Brazil’s debt led to a significant deterioration of the macroeconomic scenario as of 2014, which resulted in a reduction in private investment, an increase in unemployment and negative growth rates for several quarters. In this sense, this paper aims to analyze the macroeconomic fluctuations experienced by the Brazilian economy using the analytical framework developed by Business Cycle Accounting (BCA) for quarterly data from 2002 to 2019. Among the main results found, the efficiency wedge was the main responsible for reproducing the output movements observed in both recessions, followed by labor wedge.

Suggested Citation

  • Matheus Cardoso Leal & Marcio Issao Nakane, 2022. "Brazilian economy in the 2000’s: A tale of two recessions," Working Papers, Department of Economics 2022_20, University of São Paulo (FEA-USP).
    • Handle: RePEc:spa:wpaper:2022wpecon20
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    Keywords

    Business Cycle Accounting; Brazilian recessions; DSGE;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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