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Modeling Brazilian federal government fiscal reaction in the time-frequency domain

Author

Listed:
  • Valdeir Monteiro

    (CAEN Graduate School of Economics (UFC), Brazil)

  • Paulo Matos

    (CAEN Graduate School of Economics (UFC) and Fiscal Monitor (TCE/CE), Brazil)

  • Cristiano Silva

    (Center of Agrarian Sciences (UFC), Brazil)

Abstract

We use unconditional wavelet to address fiscal reaction in Brazil over the period from 2001 to 2022. We identify medium-term insolvency of net debt only in the period 2003-2004. We find antiphase (short and medium term) co-movements led by the primary balance in the subprime crisis, during the 2016-2017 fiscal crisis and in the recent pandemic. There is this same evidence with low frequency between 2013 and 2019. Mainly after the change of fiscal regime in 2017, government has issued public bonds as a solution to balance public accounts. Although the current level of debt to GDP is not insolvent, the forecast of 60% at the end of 2022 and the high annual inflation level (12.13% in April 2022) require a lot of attention.

Suggested Citation

  • Valdeir Monteiro & Paulo Matos & Cristiano Silva, 2022. "Modeling Brazilian federal government fiscal reaction in the time-frequency domain," Economics Bulletin, AccessEcon, vol. 42(4), pages 1836-1847.
    • Handle: RePEc:ebl:ecbull:eb-22-00688
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    References listed on IDEAS

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    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling

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