Do business confidence and economic growth expectations react to discretionary fiscal policy, fiscal opacity, and fiscal credibility?

Gabriel Montes and Joaci Mariano Cabral ()
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Joaci Mariano Cabral: Fluminense Federal University

International Economics and Economic Policy, 2025, vol. 22, issue 3, No 7, 43 pages

Abstract: Abstract This paper investigates the effects of discretionary fiscal policy, fiscal opacity and fiscal credibility on business confidence and professional forecasters’ expectations. The study is the first to empirically address these relationships for a major emerging economy (Brazil). The results show that discretionary fiscal policy is harmful to business confidence, fiscal credibility improvements increase business confidence, and fiscal opacity can lead to a deterioration in business confidence. The findings also show that the government’s efforts to increase the primary surplus increase business confidence. The results, using economic growth expectations as dependent variables, were consistent with those found for business confidence.

Keywords: Business confidence; Expectations; Discretionary fiscal policy; Fiscal opacity; Fiscal credibility (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10368-025-00667-7

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