The New Fiscal Framework of the Brazilian Economy: Theory, Model, and Empirical Evidence of an (Un)sustainable Fiscal Regim

Authors

  • Guilherme Jonas Costa da Silva Federal University of Uberlândia
  • Vitor Hugo Santos Pinto Federal University of Uberlândia
  • Fernando Motta Correia Federal University of Paraná

DOI:

https://doi.org/10.7203/IREP.6.1.29170

Abstract

This paper aims to develop a mathematical model capable of representing the new fiscal framework of the Brazilian economy become possible to simulate its effects in different scenarios. Considering the model developed and the initial conditions presented by the government, it can be said that this fiscal rule is not sustainable, given that in the best scenario the debt ratio should reach the level of 84.01% in 2026, well above the established goals. Evidently, the results were sensitive to assumptions and parameters originally defined by the new framework, which must be rethought and recalibrated through procedures that scan the viable solutions until the one considered optimal to be found. Finally, the Brazilian economy is caught in a trap, since the success of the new framework depends on the growth acceleration of long-term, whose resources for its viability are are insufficient for its realization and, to make matters worse, are being restricted by the fiscal rule itself.

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Author Biographies

Guilherme Jonas Costa da Silva, Federal University of Uberlândia

Professor of the Graduate Program in Economics (Federal University of Uberlândia) and Post-Doctoral Researcher at the Graduate Program in Economic Development (Federal University of Paraná)

Vitor Hugo Santos Pinto, Federal University of Uberlândia

PhD Candidate of the Graduate Program in Economics (Federal University of Uberlândia) and Fapemig Fellow

Fernando Motta Correia, Federal University of Paraná

Professor of the Graduate Program in Economic Development (Federal University of Paraná)

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Published

2024-07-10

How to Cite

Costa da Silva, G. J., Santos Pinto, V. H., & Motta Correia, F. (2024). The New Fiscal Framework of the Brazilian Economy: Theory, Model, and Empirical Evidence of an (Un)sustainable Fiscal Regim. International Review of Economic Policy-Revista Internacional De Política Económica, 6(1), 50–68. https://doi.org/10.7203/IREP.6.1.29170
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Issue

Vol. 6 No. 1 (2024)

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