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Brazilian Agricultural Credit Interest Rate Equalization Policy: A Growth Subsidy?

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  • Castro, Eduardo Rodrigues de
  • Teixeira, Erly Cardoso

Abstract

The Brazilian Interest Rate Equalization System (IRES) subsidizes farmers by providing them with credit at lower than market interest rates. The objective of this research is to evaluate the IRES by comparing its monetary cost with its benefits as measured by Brazilian GDP growth. Estimates are carried out using input-output matrix. The results suggest that each Brazilian real spent by IRES to assist Brazilian family farms increases Brazilian GDP by R$ 1.75 and that each real spent to assist commercial farms increases GDP by R$ 3.57. The IRES is a subsidy that generates economic growth greater than its cost to society.

Suggested Citation

  • Castro, Eduardo Rodrigues de & Teixeira, Erly Cardoso, 2005. "Brazilian Agricultural Credit Interest Rate Equalization Policy: A Growth Subsidy?," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24694, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae05:24694
    DOI: 10.22004/ag.econ.24694
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    Cited by:

    1. Ben McKay & Ryan Nehring, 2014. "Sustainable Agriculture: An Assessment of Brazil’s Family Farm Programmes in Scaling up Agroecological Food Production," Working Papers 123, International Policy Centre for Inclusive Growth.

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    Keywords

    Agricultural and Food Policy;

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