IDEAS home Printed from https://ideas.repec.org/a/uns/esteco/v41y2024i82p189-221.html
   My bibliography  Save this article

Fiscal dominance and risk premiun in Brazil
[Dominância fiscal e prêmio de risco no Brasil]

Author

Listed:
  • Marcio José Szpaki Zaparolli
  • Carlândia Brito Santos Fernandes

Abstract

The aim of this paper was to verify whether the Brazilian economy was under fiscal dominance in the years 2015 and 2016, during the period of the downgrade of Brazil's rating and the presidential impeachment process. We applied the model proposed by Blanchard (2004), studying the effect of an increase in domestic interest rate on the exchange one. The empirical analysis considered the movements in the capital flow and risk premium derived from the greater public indebtedness expectation. The results show that the increase causes a movement contrary to what was expected, depreciating the exchange rate given the relationship between the expected public debt and the probability of default, jeopardizing the inflationary control and confirming the fiscal dominance hypothesis

Suggested Citation

  • Marcio José Szpaki Zaparolli & Carlândia Brito Santos Fernandes, 2024. "Fiscal dominance and risk premiun in Brazil [Dominância fiscal e prêmio de risco no Brasil]," Estudios Economicos, Universidad Nacional del Sur, Departamento de Economia, vol. 41(82), pages 189-221, january-j.
    • Handle: RePEc:uns:esteco:v:41:y:2024:i:82:p:189-221
    DOI: https://doi.org/10.52292/j.estudecon.2024.3022
    as

    Download full text from publisher

    File URL: https://revistas.uns.edu.ar/ee/article/view/3022/2540
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.52292/j.estudecon.2024.3022?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    default risk; fiscal dominance; inflation; monetary policy;
    All these keywords.

    JEL classification:

    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uns:esteco:v:41:y:2024:i:82:p:189-221. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Nelly A. José or the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/deunsar.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.