Income distribution and external constraint: Brazil in the commodities boom [Income distribution and external constraint: Brazil in the commodities boom]

Antonio Neto

Nova Economia, 2017, vol. 27, issue 1, 7-34

Abstract: Within the commodities price boom, Brazil experienced rising dependency on primary exports, along with falling inequality (as a result, among others, of extensive distributive programs). However, productivity growth was meager during the period. Not only this path is unsustainable in the medium run, but may also have harmed the long-run growth consistent with BOP equilibrium. This paper discusses, in a BOP-dominated macrodynamic model based on Ribeiro et al. (2016), the impact of Brazilian distributive policies in the BOP-constrained rate of growth. It is suggested that distributive programs can harm long-term growth due to rising income elasticity of imports and higher technological gap. Lastly, it is argued that the right balance of public investment and distributive programs would allow a virtuous cycle of growth and income distribution to emerge.

Keywords: BoP-constrained growth model; income distribution; public investment (search for similar items in EconPapers)
JEL-codes: E25 E62 O33 O40 (search for similar items in EconPapers)
Date: 2017
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