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Combination of economic policies: how the perfect storm wrecked the Brazilian economic growth

Author

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  • Helder Ferreira de Mendonça

    (Department of Economics)

  • Iven Silva Valpassos

    (Department of Economics
    Petrobras and Fluminense Federal University)

Abstract

This study uses a counterfactual analysis to investigate, from the Brazilian experience, the “perfect storm” resultant from the combination of economic policies on economic growth. Specifically, we analyze whether the combination of economic policies that neglect fiscal balance and low and stable inflation with the adoption of strategies to stimulate economic growth without considering the side effects on the economy harmed economic growth. Our findings, robust to several placebo tests, show Brazil’s growth rate is approximately 2.8 pp below the “synthetic Brazil” growth rate. Furthermore, comprehending the great shocks in the period under investigation, the complementary empirical analysis supports the view that the “perfect storm” is the main factor explaining the underperformance of the Brazilian economic growth.

Suggested Citation

  • Helder Ferreira de Mendonça & Iven Silva Valpassos, 2022. "Combination of economic policies: how the perfect storm wrecked the Brazilian economic growth," Empirical Economics, Springer, vol. 63(3), pages 1135-1157, September.
    • Handle: RePEc:spr:empeco:v:63:y:2022:i:3:d:10.1007_s00181-021-02167-4
    DOI: 10.1007/s00181-021-02167-4
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    References listed on IDEAS

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    Cited by:

    1. Thomas H. W. Ziesemer, 2023. "Semi-endogenous growth in a non-Walrasian DSEM for Brazil: estimation and simulation of changes in foreign income, human capital, R&D, and terms of trade," Economic Change and Restructuring, Springer, vol. 56(2), pages 1147-1183, April.
    2. Helder Ferreira de Mendonça & João Pedro Neves Maia, 2022. "Interest rate expectations based on Taylor rule versus central bank’s survey: which performs better in a large emerging economy?," Applied Economics, Taylor & Francis Journals, vol. 54(39), pages 4532-4544, August.

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    More about this item

    Keywords

    Economic policies; Economic growth; Emerging and developing countries;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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