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Political-Business Cycles in BRICS Economies: Evidence from Brazil

Author

Listed:
  • Celso José Costa Junior

    (Ministerio de Economía, Universidad Estadual de Ponta Grossa (UEPG) & Fundação Getúlio Vargas (FGV), Brasil)

  • Alejandro C. García Cintado

    (Universidad Pablo de Olavide (UPO) & UEPG)

  • Manuel Alejandro Hidalgo Pérez

    (UPO & Secretaría General de Economía – Junta de Andalucía)

Abstract

This paper uses a DSGE model with political-regime-dependent fiscal and monetary policies so as to examine political-business cycles in an emerging market such as Brazil under three different regimes – an "opportunistic regime" and "two partisan ones". The former regime seeks to identify whether within the period of seven quarters prior to the elections, the government manipulated the economy to increase the chances of getting reelected (or securing a successor). As for the latter two, they try to verify whether the macroeconomic strategies pursued by the "more leftist" governments differed from their "more right-wing" predecessors’ monetary and fiscal policies. Our results show that there exists an opportunistic behavior by all the governments studied as regards fiscal policy, and that from a macroeconomic viewpoint, President Rouseff’s administration fared differently than previous governments. However, monetary policy turns out to be independent of the regimes considered.

Suggested Citation

  • Celso José Costa Junior & Alejandro C. García Cintado & Manuel Alejandro Hidalgo Pérez, 2019. "Political-Business Cycles in BRICS Economies: Evidence from Brazil," Working Papers 19.09, Universidad Pablo de Olavide, Department of Economics.
  • Handle: RePEc:pab:wpaper:19.09
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    References listed on IDEAS

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    More about this item

    Keywords

    political cycles; monetary policy; fiscal policy; Oaxaca model; Dynamic Stochastic General Equilibrium (DSGE) model.;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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