Political-Business Cycles in BRICS Economies: Evidence from Brazil

Celso Costa Junior, Alejandro C. García Cintado () and Manuel Hidalgo
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Alejandro C. García Cintado: Universidad Pablo de Olavide (UPO) & UEPG

No 19.09, Working Papers from Universidad Pablo de Olavide, Department of Economics

Abstract: This paper uses a DSGE model with political-regime-dependent fiscal and monetary policies so as to examine political-business cycles in an emerging market such as Brazil under three different regimes – an "opportunistic regime" and "two partisan ones". The former regime seeks to identify whether within the period of seven quarters prior to the elections, the government manipulated the economy to increase the chances of getting reelected (or securing a successor). As for the latter two, they try to verify whether the macroeconomic strategies pursued by the "more leftist" governments differed from their "more right-wing" predecessors’ monetary and fiscal policies. Our results show that there exists an opportunistic behavior by all the governments studied as regards fiscal policy, and that from a macroeconomic viewpoint, President Rouseff’s administration fared differently than previous governments. However, monetary policy turns out to be independent of the regimes considered.

Keywords: political cycles; monetary policy; fiscal policy; Oaxaca model; Dynamic Stochastic General Equilibrium (DSGE) model. (search for similar items in EconPapers)
JEL-codes: E32 E52 E62 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2019-05
New Economics Papers: this item is included in nep-bec, nep-dge, nep-mac and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:pab:wpaper:19.09

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