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Economic depression in Brazil: the 2014-2016 fall

Pedro Brinca () and João Costa-Filho
Authors registered in the RePEc Author Service: João Ricardo Mendes Gonçalves Costa Filho ()

MPRA Paper from University Library of Munich, Germany

Abstract: What is behind the economic depression Brazil experienced within 2014-2016? Using a synthetic control estimations we find that its roots are domestic. With that in mind, we apply the business cycle accounting method and find that the episode was driven by the efficiency wedge. The econometric evidence reveals that the public development bank outlays have a positive (negative) impact in the short (long) run in the efficiency wedge. A dynamic general equilibrium model with financial frictions and a public development bank is able to reproduce the dynamics of output during the crisis.

Keywords: Business Cycle Accounting; Brazil; DSGE; Financial Frictions (search for similar items in EconPapers)
JEL-codes: E32 E44 E50 (search for similar items in EconPapers)
Date: 2021-04-20
New Economics Papers: this item is included in nep-dge, nep-fdg and nep-mac
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