Strategic fiscal and monetary interactions in the Brazilian economy

Resumo

This paper identifies the leadership structure of the game played by monetary and fiscal authorities in the post-inflation targeting Brazilian economy. A small-scale New Keynesian model augmented with fiscal policy is estimated using Bayesian methods. We assume that monetary and fiscal authorities can act strategically under discretion in a non-cooperative setup and compare three different games: (i) simultaneous move; (ii) fiscal leadership; and (iii) monetary leadership. We find strong empirical support for the hypothesis that the fiscal authority acts as a Stackelberg leader. The results can shed some light to the improvement of policy design in the Brazilian economy.

Ficha do documento

Tipo

Artigo científico

Ano

2026

Instituição

EGV EPGE

Fonte

Revista Brasileira de Economia

Idioma

Inglês

Acesso

Não informado

Identificador

oai:ojs.periodicos.fgv.br:article/81603

Temas

Finanças Públicas

Palavras-chave

Monetary and fiscal policiesStrategic interactionsPolicy gamesJoint stabilization policies