Publication:
The Quality of Fiscal Adjustment and the Long-Run Growth Impact of Fiscal Policy in Brazil

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dc.contributor.authorBlanco, Fernando
dc.contributor.authorHerrera, Santiago
dc.date.accessioned2012-06-26T21:20:38Z
dc.date.available2012-06-26T21:20:38Z
dc.date.issued2006-09
dc.description.abstractThe authors describe the main trends of Brazil's fiscal policy during the past decade and analyze (1) the ability to raise the primary surplus in response to external shocks, (2) the pro-cyclical nature of fiscal policy, and (3) the long-run impact of government expenditure composition and taxation. They analyze the use of the primary balance as a policy tool within the Drudi-Prati model, wherein the government uses the primary balance to reveal its commitment to service its debt. The authors verify that both the debt ratio and the primary balance are determinants of spreads and credit ratings in Brazil. But the relationship is nonlinear: the impact of the primary balance on spreads is amplified as the debt ratio increases. Using an Autoregressive Distributed Lag (ARDL) approach, the authors analyze the relationship between the primary balance and economic activity, finding a positive correlation in the long run. However, in the short run fiscal expansions are associated with primary balance reductions and vice-versa during output contractions, confirming the procyclical nature of fiscal policy in the short run. The authors use two approaches, ARDL and a cointegrating value at risk (VAR), to analyze the interaction between public expenditure composition and taxation on growth. Similar results are obtained: large elasticities of output with respect to capital stocks, a significant negative impact of taxation on long-run GDP, and a negative impact of increasing government consumption and transfer payments on GDP. These results shed light on the contribution of fiscal policy to disappointing growth performance in Brazil during the past decade.en
dc.identifierhttp://documents.worldbank.org/curated/en/2006/09/7036384/quality-fiscal-adjustment-long-run-growth-impact-fiscal-policy-brazil
dc.identifier.doi10.1596/1813-9450-4004
dc.identifier.urihttps://hdl.handle.net/10986/9299
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper; No. 4004
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectAIC
dc.subjectASSET PRICES
dc.subjectAUTOMATIC STABILIZERS
dc.subjectBALANCE SHEETS
dc.subjectBORROWING
dc.subjectBUDGET CONSTRAINT
dc.subjectBUDGET CONSTRAINTS
dc.subjectBUDGET PROCESS
dc.subjectBUSINESS CYCLE
dc.subjectCAPITA TERMS
dc.subjectCAPITAL EXPENDITURES
dc.subjectCAPITAL FLOWS
dc.subjectCAPITAL INFLOWS
dc.subjectCAPITAL MARKETS
dc.subjectCAPITAL SPENDING
dc.subjectCAPITAL STOCK
dc.subjectCASH FLOW
dc.subjectCENTRAL BANK
dc.subjectCREDIT RATINGS
dc.subjectCURRENT EXPENDITURES
dc.subjectCYCLICAL FISCAL POLICY
dc.subjectDEBT CRISIS
dc.subjectDEBT DYNAMICS
dc.subjectDEBT RATIO
dc.subjectDEBT RATIOS
dc.subjectDEBT SERVICE
dc.subjectDEBT SUSTAINABILITY
dc.subjectDEPOSITS
dc.subjectDOMESTIC DEBT
dc.subjectDOMESTIC INTEREST RATES
dc.subjectECONOMIC POLICY
dc.subjectECONOMIC REFORM
dc.subjectECONOMIC REFORMS
dc.subjectECONOMIC SLOWDOWN
dc.subjectELASTICITIES
dc.subjectELASTICITY
dc.subjectERROR-CORRECTION TERM
dc.subjectEXCHANGE RATE
dc.subjectEXPENDITURES
dc.subjectEXTERNAL FINANCING
dc.subjectEXTERNAL SHOCKS
dc.subjectFINANCIAL CRISES
dc.subjectFINANCIAL TRANSACTIONS
dc.subjectFISCAL ACCOUNTS
dc.subjectFISCAL ADJUSTMENT
dc.subjectFISCAL ADJUSTMENT EFFORT
dc.subjectFISCAL BALANCE
dc.subjectFISCAL BALANCES
dc.subjectFISCAL CONDITIONS
dc.subjectFISCAL DISCIPLINE
dc.subjectFISCAL DISEQUILIBRIA
dc.subjectFISCAL EXPANSION
dc.subjectFISCAL EXPANSIONS
dc.subjectFISCAL IMBALANCE
dc.subjectFISCAL IMPACT
dc.subjectFISCAL OUTCOMES
dc.subjectFISCAL POLICY
dc.subjectFISCAL REFORM
dc.subjectFISCAL RESULTS
dc.subjectFISCAL STABILITY
dc.subjectFISCAL STANCE
dc.subjectFISCAL SUSTAINABILITY
dc.subjectFISCAL SYSTEM
dc.subjectFISCAL VARIABLES
dc.subjectFORECASTS
dc.subjectFUTURE VALUE
dc.subjectGDP
dc.subjectGDP PER CAPITA
dc.subjectGOVERNMENT ACCOUNTS
dc.subjectGOVERNMENT BONDS
dc.subjectGOVERNMENT CONSUMPTION
dc.subjectGOVERNMENT EXPENDITURE
dc.subjectGOVERNMENT EXPENDITURE COMPOSITION
dc.subjectGOVERNMENT SPENDING
dc.subjectGOVERNMENT SUBSIDIES
dc.subjectGROWTH RATE
dc.subjectHEALTH SERVICES
dc.subjectHIGHER INTEREST
dc.subjectHIGHER INTEREST PAYMENTS
dc.subjectINDEXATION
dc.subjectINFLATION
dc.subjectINFLATION RATE
dc.subjectINSURANCE
dc.subjectINTEREST PAYMENTS
dc.subjectINTEREST RATE
dc.subjectINTERGOVERNMENTAL TRANSFERS
dc.subjectINTERNATIONAL RESERVES
dc.subjectLEGAL FRAMEWORK
dc.subjectLIQUIDITY
dc.subjectLOCAL GOVERNMENTS
dc.subjectMANDATORY SPENDING
dc.subjectMONETARY AUTHORITIES
dc.subjectMONETARY EXPANSION
dc.subjectMONETARY IMPACT
dc.subjectMONETARY POLICY
dc.subjectMONEY CREATION
dc.subjectMUNICIPALITIES
dc.subjectMUTUAL FUND
dc.subjectNATIONAL ACCOUNTS
dc.subjectNATIONAL INCOME
dc.subjectNEGATIVE REAL INTEREST RATES
dc.subjectNET WORTH
dc.subjectNOMINAL EXCHANGE RATE
dc.subjectOPEN MARKET OPERATIONS
dc.subjectOPERATIONAL BALANCE
dc.subjectPERSONNEL EXPENDITURES
dc.subjectPRESENT VALUE
dc.subjectPRESENT VALUE OF DEBT
dc.subjectPRICE CONTROLS
dc.subjectPRIMARY BALANCE
dc.subjectPRIMARY EXPENDITURE
dc.subjectPRIMARY SURPLUS
dc.subjectPRIVATE SECTOR
dc.subjectPROBABILITY OF DEFAULT
dc.subjectPRODUCTION FUNCTION
dc.subjectPUBLIC CAPITAL
dc.subjectPUBLIC CONSUMPTION
dc.subjectPUBLIC DEBT
dc.subjectPUBLIC EMPLOYEES
dc.subjectPUBLIC ENTERPRISES
dc.subjectPUBLIC EXPENDITURE
dc.subjectPUBLIC EXPENDITURE COMPOSITION
dc.subjectPUBLIC FINANCE
dc.subjectPUBLIC FINANCES
dc.subjectPUBLIC INVESTMENT
dc.subjectPUBLIC SECTOR
dc.subjectPUBLIC SECTOR DEFICITS
dc.subjectPUBLIC SECTOR EMPLOYEES
dc.subjectPUBLIC SPENDING
dc.subjectREAL INTEREST RATE
dc.subjectREAL INTEREST RATES
dc.subjectREAL TERMS
dc.subjectREVENUE INCREASES
dc.subjectREVENUE RATIO
dc.subjectRISK AVERSION
dc.subjectRISK PREMIUM
dc.subjectSAVINGS
dc.subjectSIGNALING
dc.subjectSOCIAL ASSISTANCE
dc.subjectSOCIAL CONTRIBUTIONS
dc.subjectSOCIAL SECURITY
dc.subjectSOCIAL SECURITY SYSTEM
dc.subjectSOCIAL SERVICES
dc.subjectSOFT BUDGET CONSTRAINTS
dc.subjectSOVEREIGN RISK
dc.subjectSTATE GOVERNMENTS
dc.subjectTAX
dc.subjectTAX BURDEN
dc.subjectTAX RATIO
dc.subjectTAX REFORM
dc.subjectTAX REVENUE
dc.subjectTAX REVENUES
dc.subjectTAXATION
dc.subjectTIGHT MONETARY POLICY
dc.subjectTOTAL EXPENDITURE
dc.subjectTOTAL REVENUE
dc.subjectTRANSFER PAYMENTS
dc.subjectTRANSPARENCY
dc.subjectUNCERTAINTY
dc.subjectUNEMPLOYMENT
dc.titleThe Quality of Fiscal Adjustment and the Long-Run Growth Impact of Fiscal Policy in Brazilen
dspace.entity.typePublication
okr.crossref.titleThe Quality Of Fiscal Adjustment And The Long-Run Growth Impact Of Fiscal Policy In Brazil
okr.date.doiregistration2025-04-10T10:22:08.052997Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2006/09/7036384/quality-fiscal-adjustment-long-run-growth-impact-fiscal-policy-brazil
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeFinance and Markets
okr.globalpracticeGovernance
okr.guid288181468017063475
okr.identifier.doi10.1596/1813-9450-4004
okr.identifier.externaldocumentum000016406_20060906105548
okr.identifier.internaldocumentum7036384
okr.identifier.reportWPS4004
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2006/09/06/000016406_20060906105548/Rendered/PDF/wps4004.pdfen
okr.region.administrativeLatin America & Caribbean
okr.region.countryBrazil
okr.topicEconomic Theory and Research
okr.topicMacroeconomics and Economic Growth::Fiscal Adjustment
okr.topicBanks and Banking Reform
okr.topicPublic Sector Expenditure Analysis and Management
okr.topicMacroeconomics and Economic Growth::Economic Stabilization
okr.topicFinance and Financial Sector Development
okr.topicPublic Sector Development
okr.unitDevelopment Research Group (DECRG)
okr.volume1 of 1
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