DINÂMICA NÃO-LINEAR E SUSTENTABILIDADE DA DÍVIDA PÚBLICA BRASILEIRA

Andrei G. Simonassi and Luiz Lima ()

Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33rd Brazilian Economics Meeting] from ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics]

Abstract: This paper contributes to the debate on whether the Brazilian public debt is sustainable or not in the long run by considering threshold effects on the Brazilian Budget Deficit. Using data from 1947 to 1999 and a threshold autoregressive model, we find evidence of delays in fiscal stabilization. As suggested in Alesina and Drazen (1991), delayed stabilizations reflect the existence of political constraints blocking deficit cuts, which are relaxed only when the budget deficit reaches a sufficiently high level, deemed to be unsustainable. In particular, our results suggest that, in the absence of seignorage, only when the increase in the budget deficit reaches 1.74% of the GDP will fiscal authorities intervene to reduce the deficit. If seignorage is allowed, the threshold increases to 2.2%, suggesting that seignorage makes government more tolerant to fiscal imbalances.

JEL-codes: H62 H63 (search for similar items in EconPapers)
Date: 2005
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http://www.anpec.org.br/encontro2005/artigos/A05A051.pdf

Related works:
Working Paper: Dinâmica não-linear e sustentabilidade da dívida pública brasileira (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:anp:en2005:051

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