The coordination of monetary and fiscal policies in Brazil and the New Macroeconomic Matrix
Year: 2025
Type: article
Abstract: This article aims to analyse Brazil’s economic performance, particularly focusing on the coordination between monetary and fiscal policies from 2003Q1 to 2020Q4, with a special emphasis on the period known as the “New Macroeconomic Matrix” (NMM), from 2011Q1 to 2018Q2. To this end, the study employs a DSGE model, examining observed variables such as the nominal interest rate, the GDP, CPI inflation, and primary surplus. The main empirical results indicate a lack of coordination between monetary and fiscal policies. For instance: i) During the NMM period, increases in the Selic interest rate were not able to mitigate economic activity, at the beginning of a cycle, indicating that other forces (mainly fiscal policy) were acting in the opposite direction; and ii) A decline in Fiscal Results and an increase in Government Spending also indicate a discoordination of economic policies during the NMM period.
Source: Cuadernos de Economía
Authors: Raphael Freitas, Cleomar Gomes da Silva
Language: English
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4413985686