Fiscal Rules and the Effectiveness of Monetary PolicyEstimates for a Large Emerging Economy

Resumo

This work evaluated the effect of fiscal policy on the effectiveness of monetary policy by the Central Bank of Brazil. Using monthly data from January-2003 to January-2020, a test was conducted to gauge how the cyclicality degree of the fiscal policy – in light of the variations in the public debt – affected the variability of the short-term real interest rate. To this goal, we extracted a fiscal response index from an unobservable state variable using the Kalman filter. Applying the cointegration method and GMM estimation, the results revealed that the smoothing and effectiveness of monetary policy depend on the degree of fiscal responsiveness to the level of public indebtedness.

Ficha do documento

Tipo

Artigo científico

Ano

2023

Instituição

EGV EPGE

Fonte

Revista Brasileira de Economia

Idioma

Português

Acesso

Não informado

Identificador

oai:ojs.periodicos.fgv.br:article/85596

Abrangência

Brazil, 21st century; Brasil, Século XXI

Temas

EconomiaFinanças Públicas

Palavras-chave

monetary policyfiscal policyfiscal rulespublic debtInflationFiscal PoliciesDebtpolítica monetáriapolítica fiscalregras fiscaisdívida públicaInflaçãoPolíticas Fiscais