EXPANSIONARY CONTRACTION IN PUBLIC ACCOUNTS – A NEW EXERCISE FOR BRAZIL USING A CGE MODEL

Lucas Souza Beppler (), Carolina Silva da Trindade () and Gustavo Inácio de Moraes ()
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Lucas Souza Beppler: Pontifícia Universidade Católica do Rio Grande do Sul
Carolina Silva da Trindade: Pontifícia Universidade Católica do Rio Grande do Sul
Gustavo Inácio de Moraes: Pontifícia Universidade Católica do Rio Grande do Sul

Revista de Economia Mackenzie (REM), 2018, vol. 15, issue 2, 10-66

Abstract: The economic literature diverges on the effects of reducing public deficits in the short and long term. One of the main trends argues in favor of an expansionary feature in certain fiscal contractions. Alesina and Giavazzi (2012) highlight the composition of these fiscal contractions, emphasizing two channels of fiscal adjustment: the increase of taxes and the reduction of public expenditure. The objective of this study is to evaluate the effects of these channels in the Brazilian economy. Fiscal adjustments resulting from expenditure cuts were accompanied by an increase in production in the long term, proving the expansionary nature of the contractionary fiscal policy through expenditure reduction. For this purpose, the authors use a CGE model (MINIBR), as well as the Brazilian’s 2010 InputOutput Matrix.

Keywords: CGE; Model.; Fiscal; policy.; Expansionary; contraction. (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:aft:journl:v:15:2:2018:jul:dec:p:10-66

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