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Combination of economic policies: how the perfect storm wrecked the Brazilian economic growth

Helder de Mendonça () and Iven Valpassos ()

Empirical Economics, 2022, vol. 63, issue 3, No 1, 1135-1157

Abstract: Abstract This study uses a counterfactual analysis to investigate, from the Brazilian experience, the “perfect storm” resultant from the combination of economic policies on economic growth. Specifically, we analyze whether the combination of economic policies that neglect fiscal balance and low and stable inflation with the adoption of strategies to stimulate economic growth without considering the side effects on the economy harmed economic growth. Our findings, robust to several placebo tests, show Brazil’s growth rate is approximately 2.8 pp below the “synthetic Brazil” growth rate. Furthermore, comprehending the great shocks in the period under investigation, the complementary empirical analysis supports the view that the “perfect storm” is the main factor explaining the underperformance of the Brazilian economic growth.

Keywords: Economic policies; Economic growth; Emerging and developing countries (search for similar items in EconPapers)
JEL-codes: O23 O47 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s00181-021-02167-4

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