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Assessing the impacts of Brazil's expenditure ceiling with a multiple‐household CGE model

Year: 2024

Type: article

Abstract: Inspired by the Brazilian pre‐COVID‐19 pandemic context of fiscal austerity, we have applied a multiple‐household‐SAM‐based Computable General Equilibrium (CGE) model in order to analyze the economic impacts of different scenarios of government expenditure. We innovate at modeling an Expansionary Austerity scenario in a CGE framework and also by taking into account services of public health and education as part of the households extended income. Consistent with the literature, we verified that the expenditure ceiling can insure both Government savings and current account balance toward surplus. Apart from that, however, these surpluses have nothing to do with output and welfare improvement—even under a scenario where the expenditure ceiling “makes room” for the private investment.

Source: Review of Development Economics

DOI: 10.1111/rode.13159

Authors: Guilherme Silva Cardoso, Débora Freire Cardoso, Edson Paulo Domingues

Institution: Universidade Federal de Minas Gerais

Language: English

Topic: Fiscal Policies and Political Economy

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, No poverty

Open Access status: bronze

OpenAlex ID: W4402937304

FWCI: 0.712

Cites: 37

Cited by: 2

Related to: 10