Sustainability of the Brazilian fiscal policy and central bank independence
This paper analyses the sustainability of fiscal policy in Brazil since the financial reform of 1965 and discusses how the relationship between the Treasury and the Central Bank has determined the federal government's capacity to finance itself. A sustainable policy is defined as one such that the discounted government debt as a ratio to GDP is backed by expected primary surpluses of equal present-value. In the context of an infinite-horizon framework, sustainability is tested through the mean-zero stationarity of the discounted debt/GDP ratio. Although the overall results indicate sustainability, tests on sub-samples show that the fiscal policy was sustainable prior to 1980, but it assumed an unsustainable path during the 1980s and early 1990s.
|Date of creation:||1999|
|Date of revision:|
|Publication status:||Published in Revista Brasileira de Economia, 2000, vol. 54, no. 2. pp. 201-226.|
|Contact details of provider:|| Postal: Cedeplar-FACE-UFMG Av. Antonio Carlos, 6627 Belo Horizonte, MG 31270-901 Brazil|
Fax: +55 31 3201-3657
Web page: http://www.cedeplar.ufmg.br
More information through EDIRC
|Order Information:|| Postal: Cedeplar-FACE-UFMG Av. Antonio Carlos, 6627 Belo Horizonte, MG 31270-901 Brazil|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992.
"Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?,"
Journal of Econometrics,
Elsevier, vol. 54(1-3), pages 159-178.
- Kwiatkowski, D. & Phillips, P.C.B. & Schmidt, P., 1990. "Testing the Null Hypothesis of Stationarity Against the Alternative of Unit Root : How Sure are we that Economic Time Series have a Unit Root?," Papers 8905, Michigan State - Econometrics and Economic Theory.
- Denis Kwiatkowski & Peter C.B. Phillips & Peter Schmidt, 1991. "Testing the Null Hypothesis of Stationarity Against the Alternative of a Unit Root: How Sure Are We That Economic Time Series Have a Unit Root?," Cowles Foundation Discussion Papers 979, Cowles Foundation for Research in Economics, Yale University.
- Hamilton, James D & Flavin, Marjorie A, 1986.
"On the Limitations of Government Borrowing: A Framework for EmpiricalTesting,"
American Economic Review,
American Economic Association, vol. 76(4), pages 808-19, September.
- James D. Hamilton & Marjorie A. Flavin, 1985. "On the Limitations of Government Borrowing: A Framework for Empirical Testing," NBER Working Papers 1632, National Bureau of Economic Research, Inc.
- Trehan, Bharat & Walsh, Carl E, 1991.
"Testing Intertemporal Budget Constraints: Theory and Applications to U.S. Federal Budget and Current Account Deficits,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 23(2), pages 206-23, May.
- Bharat Trehan & Carl E. Walsh, 1988. "Testing intertemporal budget constraints: theory and applications to U. S. federal budget and current account deficits," Working Papers in Applied Economic Theory 88-03, Federal Reserve Bank of San Francisco.
- Henning Bohn, 1991.
"The sustainability of budget deficits with lump-sum and with income-based taxation,"
Federal Reserve Bank of Cleveland, pages 580-612.
- Bohn, Henning, 1991. "The Sustainability of Budget Deficits with Lump-Sum and with Income-Based Taxation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(3), pages 580-604, August.
- Bohn, H., 1990. "The Substainability Of Budget Deficits With Lump-Sum And With Income-Based Taxation," Weiss Center Working Papers 17-90, Wharton School - Weiss Center for International Financial Research.
- Henning Bohn, . "The Sustainability of Budget Deficits with Lump-Sum and with Income-Based Taxation," Rodney L. White Center for Financial Research Working Papers 17-90, Wharton School Rodney L. White Center for Financial Research.
- Wilcox, David W, 1989.
"The Sustainability of Government Deficits: Implications of the Present-Value Borrowing Constraint,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 21(3), pages 291-306, August.
- David W. Wilcox, 1987. "The substainability of government deficits: implications of the present- value borrowing constraint," Working Paper Series / Economic Activity Section 77, Board of Governors of the Federal Reserve System (U.S.).
- Bennett T. McCallum, 1982.
"Are Bond-Financed Deficits Inflationary? A Ricardian Analysis,"
NBER Working Papers
0905, National Bureau of Economic Research, Inc.
- McCallum, Bennett T, 1984. "Are Bond-Financed Deficits Inflationary? A Ricardian Analysis," Journal of Political Economy, University of Chicago Press, vol. 92(1), pages 123-35, February.
- Hakkio, Craig S & Rush, Mark, 1991. "Is the Budget Deficit "Too Large?"," Economic Inquiry, Western Economic Association International, vol. 29(3), pages 429-45, July.
- Shaghil Ahmed & John H. Rogers, 1995.
"Government budget deficits and trade deficits: are present value constraints satisfied in long-term data?,"
International Finance Discussion Papers
494, Board of Governors of the Federal Reserve System (U.S.).
- Ahmed, Shaghil & Rogers, John H., 1995. "Government budget deficits and trade deficits Are present value constraints satisfied in long-term data?," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 351-374, November.
- Ahmed, S. & Rogers, J.H., 1993. "Government Budget Deficits and Trade Deficits: Are Present Value Constraints Satisfied in Long-Term Data?," Papers 5-93-6, Pennsylvania State - Department of Economics.
- Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," World Bank Economic Review, World Bank Group, vol. 6(3), pages 353-98, September.
- Peter C.B. Phillips & Pierre Perron, 1986.
"Testing for a Unit Root in Time Series Regression,"
Cowles Foundation Discussion Papers
795R, Cowles Foundation for Research in Economics, Yale University, revised Sep 1987.
- Tom Doan, . "PPUNIT: RATS procedure to perform Phillips-Perron Unit Root test," Statistical Software Components RTS00160, Boston College Department of Economics.
- Phillips, P.C.B., 1986. "Testing for a Unit Root in Time Series Regression," Cahiers de recherche 8633, Universite de Montreal, Departement de sciences economiques.
When requesting a correction, please mention this item's handle: RePEc:cdp:texdis:td125. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gustavo Britto)
If references are entirely missing, you can add them using this form.