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A Note on the public investment-debt-cash linkages: a Brazilian cross-state analysis

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Listed:
  • Paulo Matos

    (CAEN/UFC)

  • Valdeir Monteiro

    (CAEN/UFC)

Abstract

We propose a discussion on the recent situation of investment by state governments in Brazil. After stability between 2015 and 2018, and a real drop in the following years, states invested almost R$ 76 billion in 2021. This record value has been less financed by borrowing; in 2015 this dependence was 57.9%, and in 2021, 12.1%. Our main findings are based on the estimation of a dynamic balanced panel over the period from 2015 to 2021. We find significant elasticities of the investment to Net Current Revenue (NCR) in response to its own lag (-0.21), the lagged external debt to NCR (-0.07), the lagged domestic debt to NCR (-0.14), and the lagged cash to NCR (0.14). This finding suggests that public investments have reacted to ensure its sustainability, in response to observed changes in debt and cash.

Suggested Citation

  • Paulo Matos & Valdeir Monteiro, 2023. "A Note on the public investment-debt-cash linkages: a Brazilian cross-state analysis," Economics Bulletin, AccessEcon, vol. 43(2), pages 1027-1035.
    • Handle: RePEc:ebl:ecbull:eb-22-00240
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    Keywords

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    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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