An analysis of the zero nominal deficit proposal

Manoel Carlos de Castro Pires ()

Brazilian Journal of Political Economy, 2007, vol. 27, issue 4, 651-663

Abstract: The aim of this paper is to evaluate the relationship between fiscal deficits and interest rate in Brazil. An adaptation of Taylor’s Rule is tested and the data confirmed this relationship. Furthermore, evidence from a loanable funds model shows that a lower deficit can bring interest rate down. However, policy coordination is a key feature in this process. JEL Classification: E31, E52, E61.

Keywords: interest rate; monetary policy; fiscal policy (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:ekm:repojs:v:27:y:2007:i:4:p:651-663:id:585

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