A Note on the public investment-debt-cash linkages: a Brazilian cross-state analysis

Paulo Matos () and Valdeir Monteiro ()
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Paulo Matos: CAEN/UFC
Valdeir Monteiro: CAEN/UFC

Economics Bulletin, 2023, vol. 43, issue 2, 1027 - 1035

Abstract: We propose a discussion on the recent situation of investment by state governments in Brazil. After stability between 2015 and 2018, and a real drop in the following years, states invested almost R$ 76 billion in 2021. This record value has been less financed by borrowing; in 2015 this dependence was 57.9%, and in 2021, 12.1%. Our main findings are based on the estimation of a dynamic balanced panel over the period from 2015 to 2021. We find significant elasticities of the investment to Net Current Revenue (NCR) in response to its own lag (-0.21), the lagged external debt to NCR (-0.07), the lagged domestic debt to NCR (-0.14), and the lagged cash to NCR (0.14). This finding suggests that public investments have reacted to ensure its sustainability, in response to observed changes in debt and cash.

Keywords: Dynamic balanced panel; Financing source; Public investment sustainability. (search for similar items in EconPapers)
JEL-codes: H6 H7 (search for similar items in EconPapers)
Date: 2023-06-30
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