Ensaios sobre política fiscal aplicados à economia brasileira

Abstract

This Doctoral thesis empirically assesses the Brazilian fiscal policy in the last two decades, through three essays. In the first essay, the causal link between public revenue and expenditure is evaluated in the light of the four classic taxonomies in the literature: Tax-Spend; Spend-Tax; Fiscal Synchronization, and Fiscal Neutrality. This was done through the estimation of Nonlinear Autoregressive Models with Distributed Lags (NARDL). Tax aggregates: revenue; total expenses; mandatory expenses and discretionary expenses have a long-term behavior linked to the dynamics of the activity, that is, the variables co-integrate in the long term. Also, the response of variables to short-term shocks is quite resilient, indicating that the return of these variables to their long-term trend is slow. Furthermore, the Brazilian economy has Spend-Tax characteristics about the relationship between revenues and total and mandatory expenditures, but when the relationship between revenues and discretionary expenses is analyzed, there is evidence that the fiscal policy becomes Tax-Spend. Finally, the analysis of Dynamic Multipliers shows that revenues and expenditures (total, mandatory and discretionary) react positively to positive activity shocks. However, in the face of negative activity shocks, revenues fall, but total and mandatory expenditures continue to grow, concentrating the adjustment of public accounts on cuts in discretionary expenditures in the recessive phase of the economic cycle. The second essay analyzes the nonlinearities of the nexus between public debt and the GDP growth rate by two different methods: the Autoregressive Thresholds (TAR) and the Markov Regime Transitions Method. Tests via TAR indicate threshold points for public debt of 84% of GDP in the case of Gross General Government Debt (DBGG) and 59% of GDP in the case of Net Public Sector Debt (DLSP). In the analysis via Markov Regime Transition, three regimes characterized by distinct levels of the Debt/GDP ratio are established. The tests indicate a reduction in the parameters in the transition from regimes with a lower Debt/GDP ratio to those with a higher ratio in this indicator. Therefore, higher levels of the Debt/GDP ratio are characterized by a reduction in the economic growth rate. Finally, the third essay analyzes the evolution of fiscal rules in Brazil from the implementation of the Fiscal Responsibility Law (LRF) in 2000 until the New Fiscal Regime in 2016. The empirical approach was given by the Autoregressive Models with Distributed Lags (ARDL). Cointegration tests indicate that fiscal rules have been able to maintain the sustainability of fiscal policy and that despite the setbacks, revenues; total expenses; discretionary expenditures, and public debt co-integrate in the long run. This reveals that the rules in question have had an important disciplining effect on fiscal policy over the last 20 years. Short-term analysis indicates that shocks on the revenue side dissipate faster compared to the expenditure side, which is more resilient. This is because, in Brazil, there is a set of non-fiscal rules that determine the compulsory growth of public spending.