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A further deterioration of the Brazilian fiscal reaction in view of COVID-19

Author

Listed:
  • Eduardo Lima Campos

    (EPGE Brazilian School of Economics and Finance (FGV EPGE), Rio de Janeiro, Brasil, State University of Rio de Janeiro (UERJ), Rio de Janeiro, Brasil, and National School of Statistical Sciences (ENCE/IBGE), Rio de Janeiro, Brasil.)

  • Rubens Penha Cysne

    (EPGE Brazilian School of Economics and Finance (FGV EPGE), Rio de Janeiro, Brasil.)

  • Alexandre L. Madureira

    (National Scientific Computing Laboratory (LNCC), Rio de Janeiro, Brasil, and EPGE Brazilian School of Economics and Finance (FGV EPGE), Rio de Janeiro, Brasil.)

Abstract

The fiscal reaction function measures how the government’s primary surplusreacts to the evolution of public debt. Campos and Cysne (2019b) observed that thereaction function has been almost steadily decreasing since 2012 and it has turned frompositive to negative values in 2017 and 2018. In the subsequent period, the improvementof some economic indicators led the fiscal reaction to a recovery. Nevertheless, in 2020,with the advent of COVID-19, health spending and emergency aids caused a sharp fiscaldeterioration, leading the fiscal reaction coefficient to assume, again, negative values. JEL Classification: H30; H60; E50.

Suggested Citation

  • Eduardo Lima Campos & Rubens Penha Cysne & Alexandre L. Madureira, 2022. "A further deterioration of the Brazilian fiscal reaction in view of COVID-19," Brazilian Journal of Political Economy, Center of Political Economy, vol. 42(3), pages 664-677, August.
    • Handle: RePEc:ekm:repojs:v:42:y:2022:i:3:id:94989
    DOI: 10.1590/0101-31572022-3286
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    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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