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Long-run Implications of the Brazilian Capital Stock and Income Estimates

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  • Gomes, Victor
  • Bugarin, Mirta N. S.
  • Ellery-Jr, Roberto

Abstract

The present study aims to analyze the empirical as well as theoretical implications related to the possible inconsistencies between the Brazilian capital stock estimate and its associated investment decision. The common practice of using the country’s accumulated (depreciated) fixed capital formation data as a proxy for the capital stock series generates a set of incompatible facts with dynamic models built on balanced growth and on aggregate production functions. Moreover, a related issue on the Brazilian capital income is considered in our analysis. According to the country’s National Accounts, the participation of capital income reaches about half of the aggregate income which is an unusual high share compared to international standards. It is shown that this problem can also be solved using alternative methods that lead to a more suitable capital stock series to be used in recursive equilibrium models. Finally, the long-run impacts of using the proposed capital stock series is studied using a modified basic growth model calibrated to reproduce some Brazilian empirical facts

Suggested Citation

  • Gomes, Victor & Bugarin, Mirta N. S. & Ellery-Jr, Roberto, 2005. "Long-run Implications of the Brazilian Capital Stock and Income Estimates," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 25(1), May.
    • Handle: RePEc:sbe:breart:v:25:y:2005:i:1:a:2672
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    1. Gente, Karine & León-Ledesma, Miguel A. & Nourry, Carine, 2015. "External constraints and endogenous growth: Why didn't some countries benefit from capital flows?," Journal of International Money and Finance, Elsevier, vol. 56(C), pages 223-249.
    2. Gomes, Victor & Teixeira, Arilton & Bugarin, Mirta Sataka & Ellery Jr, Roberto, 2010. "From a Miracle to a Disaster: the Brazilian Economy in the Last 3 Decades," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 30(1), October.
    3. Raphael Corbi & Elias Papaioannou & Paolo Surico, 2019. "Regional Transfer Multipliers," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(5), pages 1901-1934.
    4. Roberto Ellery Jr & Mirta Bugarin & Victor Gomes & Arilton Teixeira, 2003. "Investment and Capital Accumulation in Brazil From 1970 To 2000: a Neoclassical View," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31st Brazilian Economics Meeting] b20, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    5. Barsky, Adam J. & Islam, Gazi & Zyphur, Michael J. & Johnson, Emily, 2006. "Investigating the Effects of Moral Disengagement and Participation on Unethical Work Behavior," Insper Working Papers wpe_62, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    6. Roberto Ellery Jr. & Victor Gomes, 2014. "Fiscal Policy, Supply Shocks and Economic Expansion in Brazil from 2003 to 2007," Brazilian Business Review, Fucape Business School, vol. 11(3), pages 53-75, June.
    7. Bugarin, Mauricio & Vieira, Laercio, 2008. "Benefit sharing: An incentive mechanism for social control of government expenditure," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(4), pages 673-690, November.
    8. Thiago Trafane Oliveira Santos, 2020. "A General Characterization of the Capital Cost and the Natural Interest Rate: an application for Brazil," Working Papers Series 524, Central Bank of Brazil, Research Department.
    9. Laércio Mendes Vieira & Maurício Soares Bugarin & Leice Maria Garcia, 2003. "Benefit Sharing: an Incentive Mechanism for Social Control of Government Expenditure," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31st Brazilian Economics Meeting] b12, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    10. Thais Andreia Araujo Souza & Marina Silva Cunha, 2018. "Performance of Brazilian total factor productivity from 2004 to 2014: a sectoral and regional analysis," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 7(1), pages 1-18, December.
    11. Bugarin, M. B., 2007. "Benefit Sharing: An Incentive Mechanism for Social Control of Government Expenditure," Insper Working Papers wpe_77, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    12. Cyntia Freitas Azevedo & Angelo Marsiglia Fasolo, 2015. "Effective Tax Rates on Consumption and Factor Incomes: a quarterly frequency estimation for Brazil," Working Papers Series 398, Central Bank of Brazil, Research Department.
    13. Arnildo Da Silva Correa & Sergio Afonso Lago Alves, 2016. "A Tale Of Three Gaps: Unemployment, Capacity Utilization And Output," Anais do XLII Encontro Nacional de Economia [Proceedings of the 42nd Brazilian Economics Meeting] 031, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].

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