Public debt, economic policy coordination and their effectiveness: lessons from the EMU and Brazil

Bruno Frascaroli (), Jailson Oliveira and Má Almeida

Journal of Economic Policy Reform, 2021, vol. 24, issue 2, 219-235

Abstract: In this paper, we investigated two cases of regions that used expansionary fiscal policies in recent years to increase short-term economic activity: The European Monetary Union and Brazil. Using impulse response functions, we estimated the effects of fiscal stimuli in a New-Keynesian framework provided by the Markov-switching dynamic stochastic general equilibrium (MSDSGE) model. We produced a set of regime-dependent results that suggest that 1) economic policies should be analyzed from a coordination perspective and 2) the selected cases need to make better use of fiscal instruments and to make more accommodative public debt decisions.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:taf:jpolrf:v:24:y:2021:i:2:p:219-235

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DOI: 10.1080/17487870.2019.1609356

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